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Saturday, January 21, 2012

Irish 'commercial sensitivity' excuse a relic from Victorian times

Ireland is a very conservative place and the cocktail of inertia and an attitude resistance to change, often powered by vested interests, invariably trumps the public interest. The Irish excuse of 'commercial sensitivity' to keep information on public spending hidden from the public is a durable relic from Victorian times.

Prof Richard Tol, the environmental economist, who recently left the ESRI (Economic and Social Research Institute) and joined the staff of the University of Surrey, has commented on the public consultation on the establishment of Irish Water, the planned state agency.

He has argued that charging for water and waste water is right and proper; and doing so through a state-owned, tightly regulated monopoly is a reasonable solution (although you can argue for a mutual company instead).

A report commissioned from PWC, the Big 4 accounting firm, says:

“For the Public Utility Model a high level assessment was undertaken in relation to what the financial position of the business might be and in particular the likely funding requirements, based upon a number of assumptions made and sensitivities chosen. Given the commercially sensitive nature of aspects of this assessment, some of the specific assumptions and the detailed findings have been redacted from this section of report.”

Prof. Tol in a thread on the Irish Economy website says: "Ireland is an unwilling party to the Aarhus Convention, which grants access to data except 'where such confidentiality [of commercial and industrial information] is protected by law in order to protect a legitimate economic interest'. As Irish Water will be a monopoly, I do not think there is a 'legitimate' economic interest in hiding data.

Unfortunately, state-owned companies have made a habit of hiding behind 'commercial sensitivity' when there is none."

I have added this comment:

The state guarantee of employment for the public service and the secrecy that protects insiders in the €15bn public procurement system dates from the reign of Queen Victoria.

In recent years the Empire Day holiday has been on the agenda of the crew of the slow boat to China.

The conservative instinct is still very strong (note how lawyers on the left and right of the spectrum over the decades never saw reason for reform of the archaic British system.)

I wonder if the problem is more than just conservatism and self-interest.

We appear to have a big share of both dim and timid people in the country.

We have had ideas competitions but it would be strange to find the people who could implement change propose ideas that would gain public attention.

Tuesday, January 03, 2012

Irish have little interest in reform despite economic crash

The Irish appear to have little interest in reform despite economic crash and any changes in colonial era systems depend on continuing pressure from the European Commission-European Central Bank-International Monetary Fund troika.

Colm McCarthy, UCD economist, opened a thread on the issue on the Irish Economy blog.

The following are 2 post contributions:

Post 1: Put a cross on the mantelpiece! We begin the year on the subject of reform.

For decades, political inertia/the slow boat to China/slow motion, have been the default modes at governance level and there was little evidence of acceleration post the early Aug 2007 onset of the credit crunch and after the issue of the bank guarantee in Sept 2008.

Politicians can be slammed but is there a real public appetite for change/reform?

Eureka above left the cat out of the bag, lamenting why other issues such as German banks are not on the agenda. The truth is that it’s much more exciting feeling outraged about the shortcomings of the likes of Germans than addressing shortcomings at home.

The auld victims’ cross provides a lot of comfort and even in the small number of the population that contributes to this blog, a subject like this can never match the interest evoked by ones on banks and Europe.

This should trigger the question about the chicken and the egg.

There are consequences when we do not accept the principal responsibility for this feast and famine crisis. Forgive us our debts and pray for us!

Conservatism reigns from left to right on the political spectrum and traditional trade unions are as mute about change as their richer counterparts representing the sheltered professions.

It’s always easy to oppose change and we had a bizarre intervention in recent months from 8 former attorney generals who warned about referenda proposals but they are mute about the colonial era legal system that made them all rich and is a burden both directly on the State and citizens.

The excess earnings of the legal and medical professions do also have consequences other than direct costs - - the State spends about €500m annually on legal fees.

We do have a template of an economy that introduced reforms in response to an economic collapse; its net debt as a ratio of GDP is now a negative of more than 50%; it has no private schools and no league tables where playing rugby can give a lift for a job, as there is little variation in the standards of schools; it has no private universities and no tuition fees; teachers are required to have a minimum of a master’s degree and competition for university places are highest for teaching-related degrees not medicine and law; the equivalent of the Leaving Certificate is the only standardised exam; teachers have a lot of autonomy and the level of homework required is low; in the past decade it has been among the countries with the highest achievements in maths, science and literacy.

Finland radically reformed its educational system following the collapse of its economy in the aftermath of the disintegration of the Soviet Union in 1991.

It pays its teachers well as they are comparable with earnings of medics and lawyers - - but still lower than levels in Ireland.

In 2009, the rate for a primary teacher after 15 years was €50k in Finland and €68k in Ireland according to the OECD. It was €61k at upper secondary level and €68k in Ireland.

In Finland in 2009, a Finnish GP’s pay was 1.8 times the average wage and 3.5 times in Ireland; a salaried specialist earned 2.6 times the average wage in Finland and 4.5 times in Ireland.

According to the OECD’s Education at a Glance 2011, Finland spent 5.8% of GDP on education in 2008; Ireland spent 5.6% (Ireland’s GDP is inflated by the profits of foreign multinationals and GNP is about 20% lower. So effectively Ireland spends more on education than Finland). The United States spent 7.2%; South Korea 7.6% and Norway 7.3%.

Oil-rich Norway compares poorly compared with Finland and it has teamed up with Statoil, the state oil company, to recruit maths and science teachers.

Teachers pay in Norway is low compared with that of other graduates.

So Ireland’s university chiefs want more money from the public but fear not that there will be any hint of radicalism at this time of crisis.

The late American historian Daniel Boorstin, wrote in an essay, ‘The Amateur Spirit and its Enemies,’ published in his book ‘Hidden History’: “In the United States today there is hardly an institution or a daily activity where we are not ruled by the bureaucratic frame of mind — caution, concern for regularity of procedures, avoidance of the need for decision” — all of which, Boorstin suggested, was best summed up “on a sign over the desk of a French civil servant: ‘Never do anything for the first time’.”

I did think once that the Irish only responded to a serious problem when it had transmuted into a dire crisis. Now, I’m even having doubts about that.

Post 2: The OECD’s latest education data published last year shows that in respect of 2008, Irish per capita education spending per student exceeded Finland’s in primary, secondary and tertiary (Ex R&D spending).

http://dx.doi.org/10.1787/888932463593 (Excel)

There is little evidence of long-term thinking at policy level. While it’s said that it suited Seán Lemass and Jim Ryan, the finance minister, to have Ken Whitaker publicly associated with the proposals in ‘Economic Development’ in 1958, it’s unlikely that he would have remained as an anonymous adviser. However since he retired, there has been no senior civil servant who has publicly lifted the Victorian veil.

Enterprise agency chiefs in public waffle in bullshit and spin, rarely if ever saying anything of consequence that is not in line with the ministerial position and one can only wonder if that is the only interface that the minister for enterprise and jobs has with the market.

No wonder Bruton and his sidekick Seán Sherlock so resemble the O’Keeffe/Lenihan double act.

China’s recent rise has been remarkable and will continue to be so. However, it is building on a deep base.

According to the late eminent economic historian, Angus Maddison, until 1800, about three fifths of the world’s commerce and production took place in and around China and India. So did much of the world’s scientific and technological progress, including the Chinese invention of paper, explosives, and printing, and medieval India’s launch of modern mathematics. In the early 1830s, when President Andrew Jackson sent the first US envoy across the Pacific to Siam (Thailand), Asia still accounted for over half of global GDP.
China, a vast unified country over a span of two thousand years, overwhelmingly dominated by one ethnic group, the Han, was a pioneer in bureaucratic modes of governance. Maddison says that in the tenth century, it was already recruiting professionally trained public servants on a meritocratic basis. The economic impact of the bureaucracy was very positive for agriculture.

They nurtured it with hydraulic works; printing enabled the distribution of illustrated agricultural handbooks; farmers settled in promising new regions; a public granary system to mitigate famines was established. They fostered innovation by introducing early ripening seeds which  permitted double or triple cropping. New crops were introduced  - - tea in the T’ang dynasty, cotton in the Sung, sorghum in the Yuan, and new world crops such as maize, potatoes, sweet potatoes, peanuts and tobacco in the Ming.