Sunday, 26 August 2012


One of the big worries, of anyone going into hospital in recent times, is the possibility that  a drug resistant infection will sweep through the hospital  while one is  there, and the time spent in hospital will make one sicker, rather than better.

This was not as big a concern twenty years ago, as it is  today.  The risk can be mitigated by emphasis on cleanliness, but the danger remains, and is increasing all the time.

One reason is that dangerous bacteria have been evolving faster, and developing  antibiotic resistant strains faster,  than pharmaceutical companies have  been  inventing   new  antibiotics.
To counter drug resistant bacteria , hospitals are having to fall back on older antibiotics, some of which have bad side effects.

So far the problems have been managed by these methods, but it is easy to envisage a catastrophic outbreak, and a really large number of lives being lost across the world. 
A recent article in the “Washington Post” highlighted the fact that 13 new categories of antibiotics were invented by the pharmaceutical companies in the 23 years between 1945 and 1968

But in the 44 years  since  1968, only 2 new categories of antibiotic  have been invented!
According to the Washington Post, Pfizer recently closed down their antibiotic research centre in Connecticut, with a loss of 1200 jobs.

Other areas of research are more profitable for pharmaceutical companies than research on new antibiotics to counter new  antibiotic resistant infections, and they are putting the money where the profits are to be made. Pharmaceutical companies are businesses, and there shareholders want a financial return.

Research aimed a inventing drugs aimed at preventing or treating chronic conditions is more profitable, because those drugs  will be  used more often if they work,  than is research aimed at developing new antibiotics to deal with the rare, but catastrophic,  events that occurs  when there is an outbreak in a hospital of infection by an antibiotic resistant bug.

All  new medicines are incredibly expensive to research, test ,and have approved(about  100 million euros each),  and a high proportion of them never make any money, either because they do not work in the  way  hoped for, or they are beaten to the market by another  medicine from a rival company.

So , if a company can make ten times as much from  researching  a new  treatment  for a chronic condition,  than  it can developing  antibiotics, it is no wonder that  new drug resistant bacteria are winning the war in our hospitals.

Perhaps it is time to find a new way of setting priorities in pharmaceutical research.
Would it not be better for pharmaceutical companies to come together and pool resources to do research on medical problems that are of major public health importance, but which yield less short term profit?

Should the European Union, and governments generally, do more to ensure that public money, and tax concessions for R and D, are devoted to  less profitable, but potentially more severe, medical issues, like antibiotic resistance?

Sunday, 19 August 2012


The Austrian Foreign Minister is reported as having said recently that

 “We need the possibility to throw someone out of the monetary union”

And the Finnish Foreign Minister supposedly said 

“The break up of the euro does not mean the end of the EU. It could function better”

Both men should read a paper by a man who actually has some direct recent experience of  what happens after the breaking up of monetary unions.

He is Anders Aslund and he worked as an advisor to the Russian Government during the breakup of the  rouble currency union  between  1991 and 1994.
The rouble had been the common currency of the former Soviet Union. Aslund’s paper is  published on the website of the Washington based Peterson Institute of International Economics. 

The first thing to say about what the two Foreign Ministers are advocating is that it is illegal.
A country cannot be expelled from the euro under the existing Treaties, and those Treaties cannot be amended without the consent of all 27 EU states.

This is no mere legalistic point. The EU has no police force to enforce the provisions of its Treaties on those who have signed up to them. The entire existence of the EU rests on the voluntary acceptance of the rules laid down in the EU Treaties by everybody. If that is called into question, as it would be if an attempt was made to put a country out of the euro, the whole basis of the EU itself ceases to have any meaning.

The framework of trust within which business is done would be shot through. One could no longer rely on EU rules being respected. The rule of the strong would be inaugurated, and business between countries would become impossible.

Anders Aslund says that the result, of  even one country leaving the currency union, would be chaotic. 

The first big problem would be what value to put in the uncleared, interbank, balances that would be outstanding in ECB payments system at the moment of the departure of one or more countries from the euro. This system is automated and allows money transfers which are essential to keeping commerce flowing. These balances would probably be owed to countries like Germany, with a trade surplus, by countries that are running trade deficits, like Greece.  

If the valuation of these balances was disputed as between euros, and whatever new currency was issued overnight by (say) Greece, trade would freeze up, because no one would trust one another’s payments. 

Would the balances be settled in newly appreciated euros, or in the newly depreciated currency of the countries departing the euro? 

If one country had departed from the euro, which country would be next?

Everyone would send for their lawyers. The economy and trade could simply come to a stop because no one would trust the value of anybody else’s money 

There would be huge losses of output and money, which would affect every country, creditors and debtors alike.

Because there would be so much uncertainty about the value of currencies, and doubt about the value of securities held by banks, there would be a risk of people no longer trusting their money in banks at all. 

Since the abolition of the gold standard, all credit, and even money itself, are nowadays based simply on confidence and trust. 

An attempt to break up a supposedly irreversible currency union, as envisaged by the Finnish and Austrian Ministers, would undermine the confidence and trust upon which the entire European economy rests.

It would not be like a devaluation of an existing currency, but would instead be an attack on the entire framework underlying money in Europe.

Anders Aslund does not believe it would be possible for one country, like Greece, to leave the euro, without the whole system breaking up.

When the rouble based monetary union of the old  Soviet Union broke up, the newly independent central banks of the newly independent republics tried to give their  own countries an advantage over others, by loosening the purse strings, and printing more of their new currencies. This led to hyperinflation, rates of inflation of 100% or more. There was a dramatic fall in living standards in all the former Soviet Republics, of about 52%.

People became 52% worse off than they had even been under the old decrepit Soviet system!

Some countries are still recovering from the chaos unleashed by the break up of that   monetary union.  Creditor republics, like Russia, lost just as much as did the republics that owed them the money. 

That what actually happened the last time a multinational monetary and  currency union broke up in Europe, just 20 years ago. 
According to Aslund

“The causes of these large output falls were multiple: systemic change, competitive monetary emission leading to hyperinflation, the collapse of the payments system, defaults, exclusion from international finance, trade disruption and wars”

Similar events occurred in  Yugoslavia when its  currency union  broke up, and also when the Austro Hungarian Empire currency union broke up after the First World War.
People would not want to accept new local currencies, if they had the option of using dollars, or a strong currency, whose value would be more reliable. Money would flow into a few strong currencies and these currencies would appreciate artificially. 

This would mean a loss of competitiveness for the countries concerned, and that might prompt them to   reintroduce exchange and capital controls to prevent the loss of their export markets. That would destroy a pillar of the EU single market.

The single EU market would also be damaged if  other  EU countries used competitive devaluations to win market share.

The situation in the EU would probably be worse than in the Soviet case, because euro area economies are much more complex, and with automated and electronic trading, contagion can now spread even more quickly even than it could in the 1990’s. 

Some argue that Greece could gain from leaving the euro, because it could devalue, and thus make its exports more attractive.  The devaluation would be like an overnight wage cut of 50%.  But there could just as easily be a total loss of confidence, a rush of money out of the country, and hyperinflation. It is not clear anyway what export markets Greece could quickly exploit, with its new cheap currency, or how its neighbours would react.

The Austrian and Finnish Foreign Ministers should study a little more economic history before they make more statements.

Saturday, 11 August 2012


It is indeed an honour, formally to open this summer school, and, more so, to do so here in Avondale, where , as a guest of the Parnell family, Tom Moore composed that lovely ballad “The Meeting of the Waters” celebrating the beauty of  the Vale of Avoca, long before Charles Stewart Parnell was born.
I am delighted that you are putting special focus this year on the 1912 Home Rule Bill, which finally became law in September 1914.
I have spoken in Woodenbridge earlier this year about the tremendous constitutional political achievement the passage of that Bill in 1914 represented, overcoming, as it did, the opposition of the House of Lords, armed threats, and the relative indifference of many members of the Liberal Government.
 John Redmond and his party demonstrated a thorough mastery of parliamentary negotiation in achieving that goal, something that could have been a stepping stone to complete  legislative and economic independence  for Ireland, without resort to the taking of life, the goal for which Redmond’s close friend  Charles Stewart Parnell had worked all his life.
It is significant that Gladstone, when he first considered supporting Home Rule, had in mind the then relationship of Norway with Sweden. As events were to prove, that relationship, which Gladstone saw as a model for Home Rule, did turn out to be a stepping stone to complete Norwegian independence.
I will not go over that ground again today, but will focus more, on Parnell himself, and on what his life  and work, has to say to Ireland of the 21st Century.  Surveying his career, one can find many themes that retain ,or have recently regained, contemporary relevance.
Parnell entered Parliament as a member for Meath in 1875 in a by election.
He had previously contested a by election in Dublin county, but was defeated there, by the Conservative  candidate , Colonel Taylor, of Ardgillan near Balbriggan, a result which demonstrates the invincibility of the Taylors in every century!
Interestingly, in light of subsequent events, the 27 year old Parnell relied heavily, in securing the Home Rule nomination to stand in both contests, on a fulsome endorsement  from his local Catholic Parish Priest, Father Richard Galvin of Rathdrum.
Fr Galvin described Parnell “up to the mark” on all the great questions of the day, which meant for him, Home Rule, denominational education and fixity of tenure.
After losing in Dublin, in seeking the nomination in Meath, Parnell also had an animated interview with the then Catholic Bishop of Meath ,Thomas Nulty. He secured the bishops support, and the highlight of his successful campaign, according to his biographer, FSL Lyons, was a great meeting in Navan, attended, inter alia, by many parish priests and curates.

In the campaign, Parnell committed himself to denominational education, “under the proper control of the clergy”, as he put it. Indeed he subsequently supported denominational education at university level too.
The issue of denominational education has been a live issue in Irish politics since the 1830’s, and remains so to this day. As Parnell recognized, Irish people saw a link between ethical formation and religious belief, and thus favoured denominational involvement in education, as most of them still do. Exactly how this is to be done is a matter of balance, which alters over time. Denominational education preserves diversity, something  Parnell wanted in a Home Rule Ireland.

Very early in Parnell’s parliamentary career, Ireland faced something, with which we have unfortunately recently  had to cope with again, a sudden  fall in income, partly  due to the forces of globalization.
The heavy concentration of small holdings on the western seaboard meant that, in that heavily populated part of the country, people had a very precarious livelihood.
 In the 1870’s , the immensely fertile grain growing regions of the Mid Western United States gained  access to the global market, thanks to  massive railway construction and improved shipping. 
These regions were able to supply grains to Europe at prices well below those at which Irish, British, and  other European farmers could produce them.
 This meant an immediate fall in farm incomes in these islands, and a fall off too in the demand for migratory seasonal labour in Scotland and the east of Ireland, on which many western farmers had come to depend to supplement their incomes and to pay their rent.
 And then, in 1879, there was a disastrous summer, and blight afflicted the potato crop. Potato production plunged from 4 million tons in 1876 to only 1 million in 1879. People began to starve.
Parnell saw this crisis as an emergency, but also as an opportunity.
 He sent some of his lieutenants to the United States to raise funds to relieve starvation in Ireland , AND to fund a new National Land League to campaign for a  change in the basis of land ownership in Ireland. Through the New Departure, he won Fenian support for this campaign, by linking it with the cause of self government for Ireland.
Parnell’s ability to turn, what was objectively a humanitarian disaster into a vehicle  for political and economic reform, marks him out as a politician of exceptional talent. 
 The ideas were not all his own, but he could fuse into something potent. It  is fair to say that the disastrous fall in incomes that occurred in the late1870s would have happened, no matter what system of land tenure, or of  Government Ireland then had, so  it took someone of Parnell’s talent to turn it into something more far reaching.
 This is, I think, something that current Irish political leaders can draw from Parnell’s career, in facing today’s economic crisis. In a crisis, it is possible to get people to see things differently, and to agree to changes they might not undertake in calmer and less anxious times
 Parnell’s career  also  demonstrates the value of grass roots political organisation, and disciplined  parliamentary parties.
The Irish Parliamentary Party, of which Parnell became the  first leader in  1884, was the first disciplined parliamentary party of its  kind in the House of Commons, and perhaps in the  world.
 It became the model for others. Members were bound by a pledge, signed before they were accepted as candidates, and agreed to sit, act and vote on the basis of collective majority decisions.
I believe it is part of Parnell’s legacy that Irish parliamentary parties in Dail Eireann , 130 years later, are  more disciplined in the way they vote, than is the case in equivalent situations in the  UK, in most European countries, and certainly than in the US.  This is a  strength in Irish politics, which can be traced back to Parnell.
While party discipline has downsides, it creates conditions in which decisions, once made, can be quickly and coherently implemented. This is important in dealing with a crisis.  I would argue that party discipline in this Dail, and in the last one,was one of the factors which enabled the Irish Governments of the day to act more quickly in dealing with the financial crisis than most other European states were able to do, and certainly than has been the case in the US.
 Imagine what it would have been like in the last four years if the Dail consisted of 166 entirely independent members, responsible only to their own particular constituencies or of members , like in United States who were beholden to special interests and who could ignore the collective view of their party. A speedy response to the crisis would have been impossible. 
Where the party pledge proved, unfortunately, to be much less operative was in Parnell’s own case.
 He did not apply the principle of collective majority decisions to himself and to his own position as leader, after that came into question when Gladstone said that, in the wake of the revelations in the O Shea divorce case, that the Liberal Party’s alliance with the Irish Party would cease, because of the impact on opinion in the Liberal grassroots of the divorce court revelations. 
 Although a clear majority of the Irish Party MPs wanted Parnell to step down, partially or fully, Parnell would not accept the majority verdict, something that would not happen in any Irish parliamentary party today.
Parnell’s approach to the land question was more nuanced that  one might think. Unlike Michael Davitt and most of his own party, he did not favour what eventually happened, the outright and compulsory transfer of all land from the landlord to the farmer who was already farming it.
 He proposed an amendment in 1888 which would have restricted tenant purchase to holdings where the  rateable valuation(PLV) was 20 pounds, a  small farm of no more than  30 acres. Later he revised the figure up to 50 pounds  PLV.
Basically his position seems to have been that he wanted to allow the survival of small residential Irish landlords(like himself), and only wanted  compulsory transfer of the  holdings of the  absentee landlords. He argued that residential landlords were “well fitted” to “take part in the future social regeneration “of a Home Rule Ireland. Frank Callanan has speculated that that he took this course with a view to reducing Protestant landholding opposition to Home Rule,  and perhaps as a bridge  to Unionism more generally.
But his party did not support his position. Indeed this may explain why, when the party split over his leadership, Parnell’s support was weakest in  counties like Carlow, where there was a significant presence of large tenant  farmers who aspired to be owner occupiers, without Parnell’s upper limit.
As I said earlier, Parnell was first elected to represent Meath, a county it was my honour also to represent, ninety years later.
I remember in my first campaign in 1969 meeting a neighbor, Charlie Curley of Castlefarm, who told me his father had been ardent Parnellite, who had heard Parnell speak under the Big Tree in Dunboyne village. The tree still stands, a mute memorial to the deceased leader.
Dunboyne was a Parnellite parish, but during the split, the local parish priest preached a particularly strong sermon against Parnell. A majority of local people decided to punish the PP by not making offerings at funerals. As a result, until funeral offerings were finally ended in the 1970s , Dunboyne was the only parish in Meath where  they did not take place. 
The Parnell split in Meath is well described in an excellent book by David Lawlor, whose own grandfather was  involved.
 Reading his book ,I was amazed to discover how many of the descendants of  the protagonists in the split were still active in local politics. One was the longtime chairman of Meath County Council, and political ally of my own, Paddy Fullam, whose grandfather had been elected as an  anti Parnellite MP in South Meath, only to be unseated as a result of  a Parnellite election petition. 
I am delighted to declare the 2012 Parnell Summer School open.
Speech by John Bruton, former Taoiseach, at the opening of the  2012 Parnell Summer School on Sunday 12 August 2012 at  4.30pm