Look out: Mc's back in town

THE EDUCATION PROFILE: COLM MCCARTHY, UCD ACADEMIC AND CHAIR OF AN BORD SNIP NUA:A quintessential Dub, Colm McCarthy still speaks the language of the bar rather than the boardroom, say colleagues. In a surprise move, he left consultancy to take a lecturing job in UCD. His next task? Cutting the State's huge budget deficit, writes LOUISE HOLDEN

'THE ROOTS of Ireland's fall date to more than 20 years ago, when a clutch of economists, politicians and civil servants put their heads together in this very pub and planted the philosophical seeds for the Irish economic miracle," wrote Landon Thomas recently in the World Business section of the New York Times.

Thomas correctly identifies Doheny and Nesbitt’s pub in the centre of Dublin as the nesting box for the boom.

Colm McCarthy was the dean of the so-called “Doheny and Nesbitt School of Economics”, where he delivered nightly lectures in the company of Sean Barrett, Moore McDowell, the late Paul Tansey and others. He now delivers the same lectures to 18-year-old undergraduates in UCD.

McCarthy distinguished himself as a passionate advocate for Irish recovery in the 1980s and was called upon to serve on the first Bord Snip in 1987. In the meantime he steered a very successful economic consultancy firm; Davy, Kelleher and McCarthy.

When, in 1987, McCarthy was called upon by minister for finance Ray McSharry to turn pub talk into policy and make radical cuts in public spending, he could hardly have guessed that 20 years later his services would be required in the same capacity. Bord Snip (or the Expenditure Review Group) is back – with McCarthy as its chair.

He’s no longer an economic consultant, he’s a university lecturer. A lot has happened in 20 years. But talk to the original Doheny and Nesbitt School, or the next generation of analysts, and you’ll discover unequivocal support for McCarthy’s reappointment.

“It’s a shame that we’ve had to bring him back,” says one leading economist. “It shows how badly we’ve screwed up the Irish economy. Twenty years after McCarthy did what was necessary to bring the public finances back into line, we’re discussing Ireland’s debt sustainability again.”

McCarthy’s appointment makes sense for a number of reasons. Apart from his experience in the original line-up, he has catholic knowledge of macro and micro economics from his years with Davy Kelleher McCarthy Consultants and, more recently, his position in the UCD School of Economics. McCarthy knows transport and energy from his consulting days, education from his academic role and the economy from years of close proximity to Irish markets – a boast that few academics can make.

“He’s one of the smartest people I’ve ever met,” says a former colleague. “He understands the nuances of economics from an arithmetical point of view. He has expertise in many sectors and can move quickly from macro to microeconomics in a way that few others can.”

But it is McCarthy’s temperament that really makes him fit for purpose, say others who know him. A sociable man with a passion for soccer, McCarthy still speaks the language of the bar rather than the boardroom. “He’s the quintessential Dub,” says an associate who has known him since the first Bord Snip. He socialises with a variety of politicians, hacks and artists including The Dubliners and Shay Healy, according to a friend. “He’s smart enough to have worked on Wall Street, but he never wanted to leave Dublin.”

McCarthy was schooled in St Joseph’s, Fairview (CJ Haughey’s alma mater) and studied economics at University College Dublin and the University of Essex. He worked at the Central Bank of Ireland and the Economic and Social Research Institute before leaving to set up Davy, Kelleher and McCarthy in the mid-1980s. He left the firm to take up his role as a lecturer in UCD in 2005.

To the observer, it was a curious detour: the salary scale for most university lecturers in Ireland is between €56,000 and €88,000. McCarthy is certain to have lost money in the exchange.

“UCD got a bargain,” says one leading economist. “They got a guy with exceptional ability and a subtle, laconic delivery that combines deep knowledge of econometrics and statistics with a very popular style. There are very few like him in economics.”

McCarthy is a loyal patron of the annual Dublin Economic Workshop in Kenmare, Co Kerry where he meets and theorises with the likes of UCD Prof Rodney Thom. “No doubt Rodney put it to him that he might as well get paid for lecturing to 18 year olds, rather than lecturing the rest of us for free,” says a commentator. “McCarthy is interested in the world of ideas and getting at the truth of the matter – in many ways he’s a natural academic.”

Others say that he was never a natural consultant, despite his success in the business. “As the saying goes, a consultant is a guy who borrows your watch and tells you the time. Colm has an intrinsic need to tell the truth,” says a friend.

Another former colleague confirms that McCarthy has had his eye on education for some time. “He always had an ambition to teach before retiring completely. I think he got tired of consultancy and the pressure to write the reports that clients want you to write. Colm was never interested in making pots of money. He wants to be stimulated. He put philosophical limitations on his consultancy work, he was never a hired gun.”

He is now, in one respect. As chair of An Bord Snip Nua, McCarthy will be expected to do the unpleasant work that the Department of Finance has been unable to do. He hasn’t been appointed for his loyalty to the party: he has publicly upbraided the current administration for profligacy and fiscal drift, reserving particular disapproval for grandiose projects such as the Bertie Bowl, and as he dubbed it “Airhead Park”.

McCarthy has savage cuts to make this time around. He will have a harder job, say some analysts, because public servants developed corners in the boom years and will resist change.

Others say that a decade of Exchequer extravagance has left a rich harvest of low-hanging fruit for McCarthy to pick off. McCarthy has watched with growing alarm the unpicking of all his good work and may relish the chance to swing the blade again.

“Colm is not political, he is patriotic,” says one observer. “He will point out wastage bluntly and will not pull his punches. He’s not afraid to take hard decisions.”

Some express doubts about the appointment. “He was absolutely the man for the job in 1987, but it’s like what they say about the mini-skirt: if you wore it when it was first in fashion, you probably shouldn’t wear it when it comes around again. It’s hard to see how he can do the same trick twice with a different set of people, especially with a government that is too inexperienced to let him do his job.”

In his new role at UCD, however, his efficacy is not in question. “Colm’s a natural performer. He could have been an actor in another life,” says a fellow academic. “You can just imagine him delivering O’Casey’s line: ‘The blinds are down, Jockser, the blinds are down ...’”

The average UCD student is entitled to sense of privilege. Having “Mc the Knife” as a lecturer is as close to the action as a budding economist can get.

Cutting Remarks: Colm McCarthy talks

Never shy to put his opinion on the record, the chair of An Bord Snip Nuahas been described as "the Roy Keane of economics".

In the 1980s, Colm McCarthy and others shared their wisdom in the pub. The Doheny and Nesbitt School of Economicshas changed venue since; it's now hosted by www.theirisheconomy.ie, a blog site where economists of every generation share their wisdom.

Here are just a few samples of Colm McCarthy's public musings on air and online:

On the Pension Reserve Fund:

"The Government has been borrowing money in order to pretend to save. This is not saving, it is pretence."

(Questions and Answers, RTÉ, 2003)

On opposition to the Ringsend incinerator:

"Dublin is not a rustic hamlet in the middle of Roscommon."

(Questions and Answers, 2007)

On the health service:

"A huge big nationalised industry, tax financed, centrally run, offering a free product – the whole thing is riddled with difficulties. There should be competition – these [hospitals] should have lost customers by now."

(Questions and Answers, 2007)

On a fiscal stimulus package:

"Any attempt by Government to stimulate will run up against Ricardian Equivalence: if the private sector is determined to improve its balance sheet through cutting consumption and investment spending, fiscal easing will either fail, in which case it is pointless, or 'succeed' at the cost of frustrating the unavoidable private sector adjustment."

(www.irisheconomy.ie, December 2008)

On debt/GDP ratio:

"The sovereign debt markets are far less friendly now to countries borrowing 10 per cent of GDP than they were in the 1980s, when only a few countries had big borrowing requirements. There should, specifically, be no presumption that Ireland will be allowed to run up the debt/GDP ratio to over 100 per cent just because we were facilitated last time. Anyway, who wants to find out what is the max borrowing limit?" (www.irisheconomy.ie, December 2008)

On language abuse:

"A Sunday Business Post headline today contains the coinage 'oversaturated'. Is this overexaggerated? When will the slaughter cease?"

(www.irisheconomy.ie, December 2008)