EC4024 and EC6012 Students:

George Lee

Former RTÉ Economics Editor and Fine Gael TD

Lecture

‘Ireland’s Economic Collapse: Where To Now?’

Tuesday 20 April 2010, 18h00

CSG01 – Computer Science Building

3 Responses to “Public Lecture by George Lee”

1. Brian O' Hanlon

   19/04/2010 at 11:28 pm

   I have been toying around in my brain with an analogy. I will share it with you, if you don’t mind. Suppose, you have this site upon which a building is constructed. A building which is critical to the operation of a town or city. But the building falls down one day. We need to re-build, we need to re-build in this very location. No other location will do. But there was to be a Garda investigation, into who designed the foundations which were faulty, and led to the building collapsing in the first place. Nobody can touch the bad foundations, or comment about them, until the Garda investigation has secured criminal convictions against those responsible. In the meantime, the builders run out of patience, and say, to heck with it. We will not bother to analyse soil conditions to ascertain what kind of sub-structure aught to be designed, to underpin the future replacement building. So the builder sends out to tender, and we go off building again on the same foundations. My argument is, is this factor of the ‘garda investigation’ getting in the way? Is it really worth it? I mean, what is it meant to achieve? Is is going to prevent the Irish taxpayer having to pay it’s bill? I doubt it? No only, will the Garda investigation no achieve anything - it is also getting in the way of soil mechanics analysis, needed on the critical path of re-building of the structure. Of course, another side of the argument would say, pour concrete over the past. It will do. Like if a building project finds archaeological evidence. We should not bother with the archaeology. We should build away and stop wasting time.

   http://www.irisheconomy.ie/index.php/2010/04/19/anglo%E2%80%99s-northern-rock-strategy/#comment-46277

2. Brian O' Hanlon

   23/04/2010 at 12:30 pm

   I was listening to Paul Krugman's June 2009 lectures to the London School of Economics, I linked to the podcast in the references at the end of this blog entry.

   http://designcomment.blogspot.com/2010/04/large-scale-thinking.html

   In one of the lectures, Krugman describes automobiles as capital. He does some 'back of an envelope' calculations for the no. of automobiles sold per year in the USA. He also noted that after 20 years he traded in his old Volvo car, because it had sustained too much wear and tear. Krugman was talking in general about demand, the liquidity trap. The need for a target for 4-5% real inflation, and how politically un-obtainable it would be.

   To be honest, I am not sure if economists realise, it is not always physical wear and tear which contribute to people replacing their capital goods. Often there is a social dimension to it. An archaeologist Christine Finn, wrote a book about her year living in Silicon Valley around the time of the dot.com bust. She finds technological devices, a very useful way to describe to kids, the idea of archaeology. As kids look at something that might only be a couple of years old, as 'ancient' stuff etc.

   http://www.edge.org/3rd_culture/bios/finn.html

   In my blog entry linked above, 'Large Scale Thinking', I look at the debate surrounding renewable energy, how the economics of it work. I noted that society has this penchant nowadays to mount silly little wind mills and all sorts of gadgets up on roofs of their homes. The definitive reference on this is David MacKay's book/blog, Without the Hot Air. I argued in my blog entry, that perhaps utility scale renewable generation is a much better use of peoples' investment, and therefore might represent a better 'saving' for society for the future.

   This is where I tried to tie in Paul Krugman, and his point about 'the paradox of thrift'.

   On Pat Kenny Radio program this morning, he was talking about €3,000 per acre compensation to bogland owners not to interfere with that habitat anymore. Not to use turf as an energy fuel.

   These issues about savings, energy, investment, society are all up in the air at the moment. But my criticism of economics, is that they have not read Isaiah Berlin works such as 'The Crooked Timber of Humanity'. People do not decide to replace capital goods only because they are like Paul Krugman's 20 year old Volvo. Society changes, society decides of its own accord what it wants to do - to become divorced from fossil fuels or whatever. Then it is up to overall policy makers to try and manage this behaviour in society, so that investments are funnelled in the right way, into some capital good, which might represent a future saving for that society.

3. Stephen

   23/04/2010 at 1:19 pm

   Excellent Link Brian, nice one!