Predicting our future while forgetting our past
I remember distinctly the moment when the potential of the internet for journalists became clear. I was standing in the newsroom in RTE circa 1996 as a colleague scoped a newly-acquired internet-enabled computer.
He checked out the search engine du jour of the time (altavista) and turned round to me with an excited look on his face.
“This is going to change journalism,” he said. “Anytime a Minister ever denies anything again, we can immediately say: But didn’t you say the following on the 17th of February last?”
He was right but not as right as we all though he was.
We all thought that the internet would become a vast collective memory, unerring in its accuracy, that would hold all and sundry to task.
And potentially, it’s true. All the information is there. Up there forever. But it has not quite worked out like that. The internet contains vast amounts of information (I haven’t checked the figures in the past couple of years but I’m sure that there are as many pages out there as there are euro going into Nama).
But its vastness is also its limitation. And it has not quite worked out that way.
As journalists and citizens we are hampered by the following:
1. Skimming. The internet has increased superficiality in my opinion. We tend to skim a vast amount of stuff instead of delving deeply into one particular subject. Time constraint is also a factor. I’m convinced that technology has contributed to personal indolence or laziness when it comes to discovering things. If it’s not immediately available, we don’t bother our behinds.
2. Disorganisation. The web, for all its information, remains a disorganised place. Getting really meaty knowledge requires a lot of time and patience. It often involves a semi-nomadic trawl through much barren territory in the hope of finding an oasis of knowledget etc. We also tend to go to default sites for information (google, news aggregators, wikipedia, newspaper and TV sites and blogs). They tend to narrow rather than broaden the scope of our inquiry.
3. Excess. The great American novelist Ford Maddox Ford had a protagonist called Tietjens (I may have got the spelling wrong) who knew the contents of the Encyclopaedia Britannica off by heart. He was the closest thing a human being was to omniscience. I’m scared to think what the modern equivalent of Tietjens would have to do.
4. People don’t tend to think or question as deeply as they should. This isn’t particularly new. We tend to accept convention, resist that which challenges it. For example, a lot of assertions (well grounded, but still assertions) on climate change have become orthodoxy and are now presented by some people as facts that are unchallenged and nigh unchallengable.
So why the long prelude for a political blog?
I looked at the last of David McWilliam’s three-part documentary on the economy last night and was struck by the comment of an Oxford don that we don’t spend enough time pondering the future implications of decisions that are made today.
SIDEBAR: You can watch the red-haired one’s programme here on RTE’s player . The series is entertaining but befuddling. It’s a series of McWilliam opinion pieces shot in the most extraordinary exotic locations. So you get some really good interview but far too many (dozens of them!) pieces to camera from McWilliam’s shot from the farthest point away from Ireland on the Planet. He’s not saying anything different than he would say in an Irish Independent column. But hey, it’s David with the floppy red hair and he’s speaking to us from the walls of an ancient Mayan temple in Honduras. How cool is that? And they are all in the guise of David McWilliam’s lecturing to us using really slow enunciation as if we are all two years of age and can’t get our head around the simplest concepts. Ultimately, it’s a vehicle for McWilliams who has successfuly melded popular economics with vaudeville. And it’s good telly, give or take. The epispode was called Peak Everything. It should have been Peak Everything… including David McWilliams!
The point of all this is: There are now more economists in Ireland who say they predicted the downturn than there were patriots who said they were inside the GPO during Easter week 1916.
McWilliams is one of those who said he predicted it right. Some of his critics say that he was predicting a housing bubble for ten years and a stopped clock tells the right time twice a day.
I’m saying that it doesn’t really matter. What should matter is consistency of view; proper research; and a real basis underlying your views.
Predicting what’s going to happen with the economy or NAMA or whatever is fraught with uncertainty. There are so many variables. Will property recover? Will interest rates stay low? Will credit flow or will banks hoard? What will happen with inflation (or deflation)? How will external factors impinge on the Irish economy? Nobody knows. It’s like being asked to peer through thick fog and describe what you can see on the horizon. There are some scenarios that are more plausible than others; most of which are based on cautious reads on what will happen.
So that said, we shouldn’t put too much store in those who predicted (or say they predicted) the fall correctly. This sounds terribly cynical. But even if they were right then, that doesn’t mean they are right now when talking about what’s going to happen with NAMA.
I did two things this morning. I looked through McWilliams’s past columns and postings on his website . Whatever your views on his media image.he’s a very good economics commentator. His written stuff over the past four or five years has been right on the money most of the time. He has also been wrong – he called for an abolition of stamp duty in 2007; he also wanted Ireland to leave the euro. Neither would be beneficial.
One more small point. I’m a bit iffy of his ‘outing’ of a private meeting with Brian Lenihan. I don’t understand the big hue and cry about Lenihan eating raw garlic cloves. Obviously, he was chomping them to protect himself from McWilliams vampiric seduction!)
As an extension of that exercise, I spend a long long time this morning trawling to find clippings from the Government on economic performance during the good years. It was obvious then that property was fuelling everything. Now and again, they would make a few noises about tackling it and cooling the demand. But of course, none of them had the courage to butcher this cash cow.
Some of it is embarrassing.
Here is Brian Cowen’s last major speech as Minister for Finance, delivered in April 2008 at the Indecon conference, just a month before he became Taoiseach. I’m just going to give you two paragraphs. But he’s wrong on every count.
“Ireland is, however, in a position of strength to meet these challenges. The economy has been transformed to Europe’s second richest (in GDP per head). Growth in GDP this year and forecasts for next year indicate that despite the slowdown in construction, Ireland will continue to be among the faster growing economies in the EU. Growth, however, will be lower than we have experienced recently. As a result of this there is a need for a marked reduction in the rate of growth in current expenditure. The percentage increases which we have been accustomed to will not be feasible. We must nonetheless, continue to protect vulnerable groups in society. It is also essential to maintain the rapid growth in capital expenditure.
Fifty years ago, Ireland was one of Europe’s poorest countries. Policy makers of the time mapped a route that laid the foundations for economic prosperity. The key to the policy was openness to trade and international competition, the attraction of foreign investment and an emphasis on education. Ireland’s recent success is due to the hard work and skills of our people facilitated by supportive policies. The idea that Ireland’s success is unwarranted or unsustainable is a fallacy, although the economic context is now more difficult and risks remain.”
Fallacy? Ooops. This was heavily trailed as a hugely significant speech by Cowen, setting out the template of his economic policies upon becoming Taoiseach. Knowing what we know now, it’s clear that Cowen and the Department of Finance were living in a paralled Alice in Wonderland universe less then eighteen months ago.
Going back further, we get into the perils of prediction and the spectacular mistakes that were made by the Department of Finance. Every year between 2003 and 2008 the Department predicted a deficit yet were wrong by at least €2 billion in most of the years, when the property boom financed surpluses in nearly every year. A collective amnesia and denial set in about the implications of this. As if this could go on forever.
Here are the samples:
Then Finance Minsiter Charlie McCreevy predicted a deficit of €1.89 billion for 2003 but broke even for the year on the back of the usual bonanza from VAT, stamp duty, CGT etc etc, all related to property.
A news story from October 2005 is next:
“The State collected €1 billion more in taxes than was expected in the first nine months of 2005 on the back of continuing buoyant consumer confidence. The increases (came) in VAT, stamp duty, and excise duty. It suggests that consumer confidence remains high.
“Senior officials from the Department of Finance, who presented the figures yesterday, said that the property market had remained buoyant and ahead of profile. They, like other analysts, had predicted that there would be a certain cooling off in the sector this year, an eventuality that clearly did not arise.”
It certinaly didn’t then. But it did later. There was a collective acceptance of the state of things then that never really questioned why the predictions were so badly out of kilter, or if there was a need to address the property boom.
Kierkegaard concluded that “life must be lived forward but can only be understood backward”.
My own view is that we would be better looking backward a little deeper rather than getting too obsessed with the prediction game.