Draw Breath

I’ve just read on the excellent Stephen Kinsella’s blog that he and others have set up Irish Recovery.ie, which is “a portal for people with specific ideas that will improve people’s lives and aid the process of recovery in the irish economy.” Good stuff I say.

One thing, however. The site welcomes “specific well-argued projects that are properly costed, based on good practice and have definable and measurable outcomes are the solution to many structural weaknesses in the Irish Economy.” I don’t think anyone can argue with the general point here: make sense and be realistic. So this is not the forum for “national strike…world revolution” style arguments.

Still, I wonder how the ‘properly’ in properly costed is to work itself out. Would Stephen think, for instance, that the Bank of England’s quantitative easing experiment is properly costed? How? Over what timescale? Assuming what outcomes? I’m not sniping here: without at all denying the serious intentions here, some guidance as to what it is to ‘properly’ cost structural reforms to an economy would be welcome. Indeed, once we get beyond Dragon’s Den level ideas,  I’m not convinced that structural reforms/adjustments/what have you have ever been properly costed anywhere. They’ve been tried and then people have been either hailed as heroes, villains, or both.

On a macro note, I don’t think that the Irish actually have an important role to play in determining how their economy is to be shaped over the next decade or more. The two of the three Irish national business models have depended entirely on the structures of global capitalism for two decades. We have exploited our location in Europe to act as a magnet for American FDI and we have maintained, at best, a quasi-offshore status to facilitate the movement of global financial capital through the IFSC etc  (the third involves the exporting of Irish national resources in the form of food production and tourism).

As such, Irish prosperity relies to some extent on the decisions that Barack Obama makes about the functioning of American global and domestic capitalism. To an even greater extent, the global financial crisis provides a major opportunity for the Europeanisation of corporate governance and capitalism – an opportunity for harmonisation of standards that the McCreevy’s DG in the European Commission is grasping. Have a look at the De Larosière Report for a sense of where things might move on some issues. The Commission also has an interest in the audit, tranparency and a rake of other issues. I touch on this in my chapter for O’Neill’s and Keane’s Corporate Governance: An Irish Perspective.

Anyway, all that’s for drawing out in another post. The main point is that the Irish just have to ride the storm and then choose whether they want to compete in whatever climate the find on the other side. Sad but true.