Ireland’s government can only get smarter by outsourcing analysis, and sharing its data…

There’s a central character in Martin Lynch’s play Dockers called Buckets McGuinness. I can’t remember too much of the detail (it’s more than 25 years since I saw it at the Lyric), but the brashness of the name stuck. It could adequately describe the cavalier way the Irish government treated the apparently largesse of the Irish Tiger boom years… Eat drink and be merry for tomorrow, for we’ll be broke… As though Ireland was a nation of casuals whose docks were full to the brim with cargo, with no end of work and cash and new and bigger ships ever coming in… The reality, as Dan O’Brien noted in his commentary on last October’s budget for the Irish Times, was rather different:

A majority of euro zone members have registered a narrowing of budget imbalances since 2006. Ireland has not only bucked the trend, but the deterioration in its public finances has been far worse than that recorded in any euro zone country over the past quarter century.

If this extraordinary failure was a one-off failure, one could possibly make the case that the lessons of today will be learnt and not repeated. But it is no such thing. It is the second time in a generation that the country has inflicted upon itself such harm.

And he made a suggestion that’s been elaborated upon in today’s paper, by Eoin O’Mally. O’Brien pointed towards the fact that the electoral system has a bias towards choosing men and women who are popular members of their own community; but who have more often than not only the slimmest grasp of the higher powered world of finance:

School teachers, publicans and small-town accountants are deeply rooted in their local communities and ensure the political system avoids the kind of disconnection with voters that many other mature democracies suffer. This is the enduring strength of Ireland’s system. But it is also its greatest weakness. Such people are rarely even remotely qualified to run a finance ministry.

How to maintain the strengths while curing the ills? The answer is to depoliticise aspects of fiscal policy in much the same was as has been done with monetary policy across the world. This would allow qualified people to have a far greater input into the management of the public finances and curb the sort of “If I have it, I’ll spend it” insanity that has led to the current predicament.

That Brian Lenihan is a lawyer ‘by trade’ does little to blunt the argument. O’Brien goes on to make three suggestions which he argues would not interfere with the essentially political balancing of setting tax and expenditure rates; and all of which boil down to outsourcing key analytical functions currently be carried out inside the Department of Finance. He suggests: moving forecasting out to ESRI and evaluation of spending to a new independent institute. Then beefing up the powers and resouces of the Comptroller and Auditor General in the auditing of spending afterwards.

O’Malley continues the theme today when he argues that Cabinet oversight of increasingly complex and intertwining policy areas may now be obsolescent. So, he asks:

What could we do to ensure that policies are exposed to a thorough interrogation by a diverse range of interested parties and experts? Well, sponsoring departments could be required to publish their memorandums in advance of government meetings, not 30 years after! If these proposals could state the purpose of the policy change clearly, and why it would be expected to work, this would remove sole governmental control of policy analysis. Poor policies would be less likely to sneak under the radar.

In fact there is another means of beefing up the wider interest in the hard core issues of government. That is to simply free the data. In Britain a political revolution has been taking place simply because one newspaper, The Daily Telegraph, got hold of 1.5 million documents relating to the expense claims of MPs expenses. It’s a genii that will not now go back into the box. In fact, George Osborne’s office has been poring over of volumes and volumes of data from National Audit Office reports looking for things they can cut when they come to power, and promising when the Conservatives come to power they will publish every single item of expenditure over £20,000.

But it does not have to be that radical. Nor does it have to be argued for by trenchant Opposition politicians or newspapers with the immense resources of the Telegraph.

Anthony at the Public Enquiry blog, highlighted details of the massive spend on the private property market by local authorities around the Republic. Then Gavin (Anthony’s nephew and along with John Handlaar the moving spirit behind Kildare Street), chips in a Google graph generated data gathered from the Central Statistics Office which demonstrates just how madly central government has been spending public money, allegedly fulfilling social housing need, whilst in fact throwing good money after bad by buying housing stock at the full market rate…

The extent to which many of those costly properties still lie empty is an indication of just how pressing the need was in the first place. That they bought them off developers rather than as a planned policy of clearly identifying and then tackling real housing need serves to bolster O’Malley’s point that “much of our current monitoring of government strives to discover that monies weren’t misappropriated, not whether they were spent wisely.”

It seems to me this is a case of new wine bursting old bottles. The share scale of the boom left Ireland’s plodding bureaucratic government, civil servants as well as politicians, a long way out of their depth. But the capacity of new technologies to smarten the public debate can only be grasped by a government which has sufficient confidence in its own abilities to allow the public into areas they’ve never been allowed see before… Yet it’s not an alien concept either.. The art of the Meathail is the sharing of the ownership of common problem.

And the time for sharing has to be sooner rather than later…

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  • Of course the experts are completely impartial and ideology free. Just look at the way they all endorsed neo-liberalism and made such a stunning success of the banks. The idea of depoliticised finances is a nonsense. State finances are there to be used by the community as it sees fit, not to be managed by so-called experts who are in reality as self-interested as everyone else, and thoroughly penetrated by bourgeois ideology.

    As for the free state civil service, no more out of its depth than it has always been.

  • otto

    Maybe what you want are people who understand big finance (where it’s actually possible to understand) and have the brains and ethics to see that the best way to act might be just like that small-town accountant. Clean, up to date information, reinvestment, good reputation and not kidding yourself when you can see that something is unsustainable.

    http://www.warrenbuffett.com/warren-buffett-10-ways-to-get-rich/

  • Mick Fealty

    Denis Healey on Desert Island Disks emphasised his feeling that one of his government’s chief problems as poor analysis. One year the public sector balance was down £2 Billion, the next up £1 Billion.

    According to John Kay, ‘disciplined pluralism’ is the core virtue of a well functioning organisation in which people charged with the job are let get on with it but with strong auditing and accountability structures in place to make sure that at the heel of the hunt they achieve what they say they are going to.

  • Accountability is certainly key Mick, and something distinctly lacking in governments generally, and especially in the south. Don’t see how it can be increased by appointing more bureaucrats though.

  • otto

    Not just accountability Garibaldy. Old fashioned Accountancy.

    “Denis Healey on Desert Island Disks emphasised his feeling that one of his government’s chief problems as poor analysis”

    On my desk (overdue) is an annual business enquiry form. It asks me to enter my employees (they’re on my payroll returns), sales (they’re on my VAT returns), VAT (don’t they even know this?), expenses (they’re in the accounts I file) and even (I swear) the amount of subsidies (it’s none but anyway) I’ve received.

    We’re building databases for ID cards and health records but we haven’t developed the most obvious thing for managing an economy – a national, consolidated, set of books.

  • fair point Otto. Although that would require fixing all those tax loopholes that big business and the rich benefit from, something the government is loathe to do.

  • Dave

    Eoin O’Mally’s argument is essentially the product of an anti-democratic mentality which holds that power is too important to be left the people and that it must therefore be “outsourced” to unelected third parties be they quangoes of so-called experts or regimes such as the EU.

    It’s true that Irish people elect muppets but this is true of most electorates (the British aren’t too impressed with who they have elected either). The solution is not to remove power from those who are elected, but to ensure that people elect higher calibre individuals who will serve the national interest rather than their own. The problem is the party political system whereby a candidate is selected by these parties and elected by the public on the recommendation of those parties. It is the parties that select the muppets and the public who must simply pick and choose between the set of muppets that the respective parties have selected. The solution then is to abandon the failed party political system, not democracy.

    It also ignores the fact that the government that manages Ireland’s collapsed financial and monetary system is not the Irish government but is one of the quangoes of so-called experts that he lauds. The “boom” wasn’t a boom at all but rather it was a period of uncontrolled borrowing that began when the Irish Central Bank transferred sovereignty to the an unaccountable quango in the form of the EU’s ECB. The actual Celtic Tiger was the period preceding this handover where success was built on exports, low regulation, and a competitive economy that were all obliterated by membership of the Eurozone. Exports, for example, stagnated after joining the Eurozone are now half the level in real terms than they were before we joined it.

    Ireland traded a well-founded economy built on solid first principles for an overdraft, and that overdraft (supplied by membership of the zone) is what destroyed the economy over the period of membership. Ireland has no control over monetary policy at all, therefore it cannot control the policy rate at which money is supplied, leading to oversupply and the inevitable bubbles and wage inflation, etc, as too much money chases too few investment opportunities. Ireland does not have any control over banking regulation either since these are decided by the Bassell accords and by the European Commission (which sets the leverage ratio that allowed the banks to over leverage). There is no evidence that Irish banks lent money outside of the lending criteria that is specified by these foreign controls – indeed, the failed mark-to-market model of valuing property is part of these foreign controls. Property developers, for example, owe less than 3% of the total outstanding external debt of 1.67 trillion (up from 11 billion punts at the period before the Irish Central Bank gave control of it to the ECB).

    The solution is not to give more control of government functions to “outsourced” muppets such as the ECB and some twat with an MBA wh never ran a successful business but is nonetheless classed as an expert but to give less of it. Indeed, the solution is less government.

  • Mick Fealty

    It’s not power so much as the means by which government (and the people) judges its performance.

    I agree to an extent with some of what you say but if you look at Gav’s chart you’ll see the way the government was spending money on the housing market was only temporarily abated around the 2001 tech crash… Then it continued on an exponential growth curve that had already been in train before…

    It’s not the EU’s fault the Irish government took a punt on the housing market to solve a problem it not have. It has it’s faults, but it can’t cop for the lot Dave…

  • LGO

    Otto, there’s a crowd called BERR coming along who will…hopefully….start putting paid to a lot of this duplication. I know that they are starting at local government level, in terms of asking, “right, look at your bye-laws…look at your registration and paperwork…how much of it do you really need…how much is being collected elsewhere?”

    All aimed at freeing up the time of small business. Of course, it DOES rely on a little bit of honesty on the part of the officer who fills does the initial scanning. Turkeys and christmas comes to mind, but unlike civil servants, local government officers deal with real people, and anything that cuts out their paperwork is *generally* welcomed with open arms.