Friday, 22 November 2013


I was fifteen years of age when President Kennedy visited Ireland in 1963. 

To understand the impact of President Kennedy, one has to understand that the Ireland of 1960 was a very different place, even to the Ireland of 1970. 

In 1960, the pall of nineteenth century disappointment still hung over the country.

There was still a strong sense, at that time, that we might not be able to make it as a successful nation, at least in an economic sense.

Having gained our independence in 1921, we had failed to achieve the economic potential that many assumed independence would automatically bring, just because the British had been removed. 
This economic underachievement was due to the physical damage done by warfare between 1916 and 1923, to protectionist economic and social policies between 1932 and 1956, and to the difficulties any small island economy faced, in the era before cheap air travel, containerisation, and information technology. 

Other European countries had simply overtaken us.

Then Irish politicians, like Gerard  Sweetman and Sean Lemass, had already begun to change tack, well before the Kennedy election. Protectionism was dropped, foreign investment and exports were encouraged, island status became less of a handicap, and the economy stated to grow. 
And then, as if to confirm and symbolise the more hopeful and outward looking atmosphere, one of “our own”, a man of Irish Catholic heritage became President of the United States. Not only that, he came in person to visit our country. 

The fact that a person of an Irish Catholic background could be elected President of the United States, and could present such a modern and suave image to the world, made everyone of the same religious and national background feel that they too should reassess their own potential, that they too could achieve great things, and that the stereotypes, to which we were subject for so long, need no longer constrain us.

The effect of all this was, of course, magnified by television. President Kennedy’s elegance, oratory and charm would have not have had a fraction of the impact it had, if it had happened in 1953, before television was widespread. He was probably the most televisual President ever, and he was able to use the medium to beam hope and confidence into every Irish home.

Wednesday, 20 November 2013


The cost of health service is going to rise a great deal in coming years.

This is due to the ageing of the population and to the cost of medical treatments at the end of people’s lives.

Rising incomes in society also lead to higher expectations of health services and higher pay costs within the health service. 
Advances in medical technology make better treatments available, but these treatments are often costlier than the (less effective) treatments they replace.


But there are choices that can be made.

For example, on certain assumptions, a McKinsey study suggested that the cost of the health service in Ireland in 2040 could range between 10% of GDP and 18%, depending on policy choices.

In the UK the range is between 11% and 14% of its GDP, and the range in the US is between 24% and 26%.


What can be done to contain costs?

I saw a report of a British NHS report on Accident and Emergency visits which suggested
+ one million of the 5.2 million annual visits to A and E were avoidable+40% of patients who visit A and E are discharged needing no treatment at all+ 50% of Ambulance call outs could be managed at the scene without going to hospital+ 20% of GP consultations could be dealt with by self care or a visit to a pharmacy
These statistics suggest that there is plenty of room to encourage people to learn more about looking after their own health. The challenge is to devise policies that incentivise this in a responsible way.

Thursday, 14 November 2013


One of the reasons Ireland, notwithstanding its budget deficit, will soon be able to borrow at bearable interest rates in commercial markets, is that it has met all the deficit reduction targets it had agreed with the EU/ECB/IMF troika.

All parties who have held office in Government since the programme was agreed deserve great credit for that.
Against that background, one or two statements, buried in the middle of a long article entitled 

 “No Margin for Error”,

in the “Sunday Times” on 10th November, on Ireland’s exit from the troika’s loan programme, ought to be discussed more widely.
On the question of whether fiscal discipline would be maintained, after the troika were no longer visiting every three months, the Sunday Times claimed
“One senior Labour source said he expected the government to immediately ease back on austerity once the troika left town”.
The “Sunday Times” went on
“” There are all those new EU oversight rules, but there is already a general sense that they will not be taken too seriously” said the Labour source.”
”The government will be taking the foot off the pedal as soon as we are out of the bailout. I think there will be tax cuts, maybe even a reversal of some of the unpopular budget cuts“, the source continued, according to the Sunday Times.
This senior source seems to assume that the reason Ireland had to impose austerity was because of instructions by the troika.

He or she also seems to think that commercial lenders, on whom the country will be relying future, will be much less worried about whether the government is meeting its budgetary targets, than the Troika would have been. 

My understanding is that austerity came about, not because of instructions from anybody, but because Ireland was unable to borrow in commercial markets because the gap between its spending and its revenue was just too big in 2010.

That was not “imposed” by the troika, but by an Irish government’s own earlier spending decisions, decisions that could no longer be financed by commercial borrowing. 
To meet day to day outgoings, there had to be seen to be a plan to close that gap between spending and revenue , troika or no troika, if the state were to continue borrowing for those outgoings......from ANYBODY. 

Given that commercial lenders, or purchasers of future Irish government bonds, will want their money back with interest, just as much as the troika will, is hard to see them taking a more relaxed view of budget targets than the IMF would in similar circumstances, especially as commercial loans/bonds will be subordinate to the existing IMF loans.
I am also surprised to hear that a senior source believes that the new EU rules will not be taken “ too seriously”.  I had not come across that view before, until I read it in the “Sunday Times”!

These rules have only recently been approved, after long debate, by the European Parliament and apply to all euro area states. My sense is that they were necessary to persuade EU states, with good credit ratings, to lend money or provide back stops to  EU states with poorer credit ratings. 

These rules are also based on EU Treaties, which the Irish people themselves approved in referenda ..... the Maastricht Treaty, and  the Fiscal Compact Treaty. 

The Fiscal Compact Treaty explicitly commits Irish governments to continued reduction in deficits, until we achieve a structurally balanced budget. We are not there yet.

The Maastricht Treaty commits the state to a deficit of no more than 3% of GDP, and a debt/GDP ratio of 60%.  Ireland exceeds both numbers substantially, indeed by more than almost any other EU state does at the moment. 
As long as it has to pay any interest rate, a government, which borrows money, will find itself repaying MORE than it has borrowed.
Repaying loans will require a future government to set aside money that it will have to raise from taxpayers, refuse to spend it on services , and instead  pay it to government bondholders. 
That might not be a problem if the economy is growing rapidly, but who can guarantee that, ten years ahead?

I doubt if the anonymous “source” can give any such a guarantee!

Tuesday, 12 November 2013


I read “Napoleon and Wellington “ by Andrew Roberts recently.

Roberts wrote an excellent biography of Lord Salisbury, the nineteenth century British Conservative Prime Minister , which I really enjoyed.

This book on Napoleon and Wellington is not quite as good.
It gives an outline of their respective military careers. Wellington and Napoleon only faced one another in battle once, at Waterloo. It is arguable that this battle was not as decisive as  it was presented as being, because France’s military strength had been sapped to a fatal degree long before , in the disastrous invasion of Russia, at Leipzig, and in constant warfare elsewhere.

Even if Wellington and Blucher had been defeated at Waterloo, and Napoleon had taken Brussels, he would not have destroyed their armies. And a vast coalition, including the Russians and the Austrians, was making ready to join the British and the Prussians against Napoleon. He would probably have met his Waterloo somewhere else, later in the year.
This book is less concerned with telling the story of these two fascinating careers, as it is with how the two, who never met, wrote about one another afterwards. This becomes a little tedious at times.
Napoleon, who wrongly blamed Wellington for the choice the most isolated island in the world for his exile, was increasingly critical of Wellington’s abilities as a soldier, and he demonstrated deep animosity when left money  in his will to a man called Cantillon, who had attempted to assassinate Wellington.
Wellington collected Napoleonic memorabilia, and took up with several of Napoleon’s former mistresses,  but  he was privately disparaging of Napoleon’s generalship, especially after he had learned of the contents of Napoleons will!

Sunday, 3 November 2013



Ireland’s new Minister for European Affairs, Paschal Donohoe TD, gave an interesting speech last week.

He made the point that globalisation, of which many people complain, is not something “done to us, but is a consequence of the human desire to communicate, share, and exchange”.

He is right. 

He could have added that humans also want lots of variety, and choice in their lives, sometimes to an excessive degree, and that this drives globalisation forward as people go to the ends of the earth to find elusive “highs” in their lives.

He went on to say that the European Union gives us an opportunity to “positively mediate the consequences of globalisation”. He is right here too. A small country on its own, like Ireland, could have little impact on global trends, but the EU, as a block, can make a difference.

Globalisation has been facilitated by the internet, skype, containerisation, cheap air fares, and plentiful energy sources.

All these took investment to generate, and would not have happened, if people did not want them or were unwilling to pay for them. These technologies cannot be “uninvented” now. So Globalisation cannot be reversed. It is here to stay.


But all this variety, all this communication, and all this exchange, does not necessarily make us happier. 

In fact, the more choices we have to make, the more discontented we can often become. This is especially so, if we feel we have to make these choices to keep up with neighbours or others with whom we feel we must compare ourselves.

Choices are hard to make. They require an effort. They involve saying No, as well as Yes. And the more choices you have, the more are the things you have to say No to. The more options you have, the more regrets you may have about the choice you could not make. The more choices we have the more we expect of life, and of ourselves.

“The Paradox of Choice”, by Barry Schwartz, had the sub title “How the culture of Abundance robs us of satisfaction”.

People are shopping more now, but enjoying it less.

Increased choice may actually contribute to the recent epidemic of clinical depression. 
Depression has tripled in the last two generations, despite all the treatments now available, that were not there 60 years ago. 

The culture of” more choice” undermines institutions, like churches. Because choice is the priority, people do not want to regard religious teachings as commandments, about which they have no choice, but as suggestions about which they themselves are the ultimate arbiters.

The over estimation of the value of choice may also have something to do with the increased divorce rate, because, as Schwartz puts it, “establishing and maintaining meaningful social relations requires a willingness to be bound and constrained by them.” But constraints are exactly what the ideology of choice rejects!


“Studies have estimated that losses have twice the psychological impact as equivalent gains” says Schwartz. In other words, people hate losing 100 euro, a lot more than they like winning 100 euro. This may explain why people in modern well off societies are so anxious, and why, in the face of recent economic losses, many are regressing to old dead end ideas, like nationalism, class warfare, and xenophobia.

Happiness is, at last being measured by economists, as well as the Gross Domestic Product

It seems that once a society’s per capita wealth crosses a threshold from poverty to adequate subsistence, further increases in national wealth have little effect on happiness. You may find as many happy people in Poland as in Japan, even though the average Japanese is much richer than the average Pole

This should make us stop and think.

Economic growth is a good thing, but it has physical limits, as we are discovering with climate change and pollution. Economic growth also has psychological limits, in the sense that some forms of growth increase anxiety by offering people a bewildering array of choices that they do not feel competent to make. Markets only work well if people are informed enough, and have the time and mental energy, to make wise choices.

Laws and government subsidies will never be enough. Societies need a strong value system, if they are to be happy. These values must put human respect, ahead of material things, and put human relations ahead of maximising choice.  The science of economics is only beginning to recognise this. 

If the European Union is to positively mediate the consequences of globalisation, it must ask itself whether the values of more choice, and more material abundance, imported from economics, are sufficient to build a good society. I believe they are not, but I do not have the sense that that a discussion of alternative and better European values is  yet taking place.