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Analysis/Comment Last Updated: Feb 13, 2015 - 4:59 AM


In defence of dissent and Ireland's nattering nabobs of negativism
By Michael Hennigan, Finfacts founder and editor
Dec 2, 2014 - 7:02 AM

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Snow blankets the courtyard of Government Buildings, Dublin

Confidence and expectations are important influencers of economic trends and it should be perverse to recognise the role of Ireland's nattering nabobs of negativism but after the second home-made monumental economic bust in a generation, dissent should be welcome while acknowledging that no one is infallible nor has any group custody of the legendary philosophers' stone.

William Safire (1929-2009) a speechwriter for President Richard Nixon, and later a renowned master of etymology as the 'On Language' columnist of The New York Times Magazine, in 1970 coined the famous alliterative linguistic confection, "nattering nabobs of negativism," for a speech attacking professional pessimists in the mainstream media, which was delivered by Spiro Agnew, the vice president.

In the United States today, we have more than our share of nattering nabobs of negativism. They have formed their own 4-H club - the hopeless, hysterical hypochondriacs of history."

Safire explained later in his book 'Safire's Political Dictionary,' that he had been inspired by the phrase "prophets of doom and gloom" that had been commonly used in the 1954 mid-term congressional election campaign.

More than six years after the issue of the infamous State bank guarantee, an Irish parliamentary banking inquiry will soon hold public hearings - expect much faux-outrage and amnesia but when Bertie Ahern, taoiseach, in July 2007 attacked critics of his house of cards who were "sitting on the sidelines, cribbing and moaning" and wondered why they didn't "commit suicide," he was speaking for many citizens.

In September 2007, Ahern said: "But there is no place for negativity. No need for any pessimism. Above all, there is no place for politically motivated attempts to talk down the economy and the achievements of our people across all sectors."

Also in that month, Alan McQuaid, then chief economist of Bloxham Stockbrokers, now with Merrion Stockbrokers, wrote in the Irish Times: "I'm sick to death of people writing off the Irish economy and next year could easily see the 'Celtic Tiger' roaring more loudly than many pessimists think."

These are examples of where confidence or optimism becomes entwined with self-interest.

While short-sellers in stockmarkets bank on share prices falling, few dissenters become rich by advising little emperors on their lack of clothing.

When its partytime, economists who are dependent wage slaves, have to play the game of optimism and forecasts tend to revolve around a consensus figure while it can take several adjustments to a more realistic forecast.

In the UK, during the dot-com boom of 1995-2000, Tony Dye, a fund manager who was known as "Dr Doom," was well known for many years as the successful chief investment officer of  Phillips and Drew, an investment firm. However, he refused to follow investor fashion by buying shares in dot.com companies, fearing a slump in the markets was imminent. He was fired in February 2000, the month before the bubble popped.

Defying conventional wisdom

The protectors of the status quo and conventional wisdom will always try to drown out dissent, which is damaging to democracy.

Whether it's a cleric turning a blind eye to colleagues' child abuse or people in public and private organisations going with the flow despite their private misgivings about reckless policies, the case for embracing dissent is made.

Challenging conventional wisdom often comes at a high price and for example the whistleblower is more often than not the biggest loser. Any amount of legal protection will not change this reality.

Most times, it’s a safe bet to keep the trap shut; black swans are rare and there is also plenty company sailing in the status quo boat.

In Ireland with a culture of limited accountability in governance, a small establishment of insiders given preference on public appointments and procurement, conflict of interest seldom an issue, and common cronyism, the risks of standing apart from the pack are greater than in other countries.

While politics sometimes gives some leeway to the dissenter, business and religious organisations, show zero tolerance. The brand and the leadership cannot be endangered at all costs and even people of probity turn against the whistleblower, as he or she is seen as endangering the livelihoods of everyone else.

Family may also provide no comfort, viewing the trade-off of high principle for future income, as unacceptable.

The US Government Accountability Project warns anyone thinking of exposing an employer’s wrongdoing: think hard before you do because you are going to suffer. In a book called 'Courage Without Martyrdom,' it warns that whistleblowers “pay an enormous professional and personal price for their actions – often a price they did not anticipate.”

The effects will not disappear. “Long after the public has forgotten your courageous actions, your superiors will remember what you did to them,” the book says.

In February 2009, Paul Moore, head of Group Regulatory Risk at Britain’s biggest mortgage lender HBOS, between 2002 and 2005, who was a barrister by profession and a former partner in KPMG’s Financial Sector Practice in London specialising in regulatory services, told the House of Commons Treasury Select Committee in a written submission, that he and his team experienced threatening behaviours by executives when carrying out its legitimate role.

“I was strongly reprimanded by the CFO for tabling at a Group Audit Committee meeting the full version of a critical report by my department making it clear that the systems and controls, risk management and compliance were inadequate in the Halifax to control its ‘over-eager’ sales culture,” Moore said.

He was fired in 2005 by HBOS and was subsequently paid a substantial sum, in return for signing a “gagging” order. Moore’s replacement as risk manager was a sales manager who had no experience in risk. The appointment was made personally by the CEO and against the wishes of the other directors.

As for life since, Moore commented to the House of Commons committee: “I am still toxic waste now for having spoken out all those years ago!”

In 2004, Michael Soden, the then Bank of Ireland chief executive, was swiftly fired for accessing an escort site from his office computer. However, his successor could risk bringing the venerable bank to the brink of ruin

“Rocking the boat and swimming against the tide of public opinion would have required a particularly strong sense of the independent role of a central bank in being prepared to ‘spoil the party’ and withstand possible strong adverse public reaction,” Prof. Patrick Honohan, governor of the Central Bank said in his report on the banking collapse which was published in 2010.

Lies, damned lies and statistics

Public statements and ad hoc claims from the Irish Government are a mix of the genuine, distortions and often economies with the truth - or simple lies: "Ireland is 'not a brass-plate location'"; "...we don’t have any brass plate companies like others do have. The tax rate in Ireland is what it says on the tin."

The distortions to data caused by the significant foreign-owned sector, in particular the effects of massive corporate tax avoidance, are used by ministers for political purposes to present performances that are exaggerated and very misleading - a significant development occurred last week when  the Fiscal Advisory Council, a public body, broke ranks and highlighted that over 40% of GDP growth in the first half related to overseas contract manufacturing - Finfacts has previously reported on this trend that is tax avoidance related.

In February 2013, Michael Noonan, finance minister, at a Bloomberg event in London, attributed the jump in services exports to “the significant price and cost adjustments that have taken place in recent years.” This was untrue as the rise related to Double Irish transactions by companies such as Google and Microsoft.

Finfacts asked to Department of Finance for details on the claim but the main press officer ignored our requests.

In April 2013 in a speech in Amsterdam, Mario Draghi, ECB president, said on the reduction in unit labour costs: "Ireland has seen an 18 percentage point improvement relative to the euro area average." This reflected the official Irish data but again, in reality it was a fiction.

Ministerial statements on the Irish corporation tax system, have also been misleading.

The idiot/ eejit's guide to distorted Irish national economic data

43% of rise in H1 2014 GDP from manufacturing overseas - Irish Fiscal Council

So when governments are not always honest with citizens why should they expect them all be gullible?

On Monday, Pat Rabbitte, former minister and Labour Party leader, took Fintan O'Toole, Irish Times columnist, to task for unbalanced criticism of the Government, in an op-ed in the newspaper.

O'Toole was a critic of Labour going into government in early 2011 and during the general election campaign the party stupidly over-promised on what it could achieve in opposing European Central Bank policy and austerity policies.

Governments invariably claim credit for good news whether it is justified or not and an example is Enda Kenny, taoiseach, writing to President Obama, to request flexibility in the president's recent executive order, for Irish illegal residents in the US, to allow them return for holidays in Ireland. Apart from the fact that the Irish Government would not do the same for refugees in Ireland, realistically Obama cannot give preference to one nationality - still the effort is to be identified with a good news story.

The problem is that the Government wants to claim all the credit when it was for example working to bailout troika deadlines for three years.

Rabbitte does make a valid point when he implies that the downsides of alternative policies, whether in respect of default or leaving the euro, were usually ignored - when such consequential moves would have involved both potential gains but likely more downside risks.

In conclusion: the insiders disastrously failed to take advantage of the best opportunity in our history to put the Irish economy on a sustainable basis.

The per capita standard of living is similar to Italy's not as what is suggested by GDP or GNP per capita; there is no credible enterprise policy that would reduce the dependence on American firms to provide ready-made jobs.

Job numbers are growing again but serious challenges remain - ministers like to brag about the official unemployment rate but some inconvenient facts are invariably ignored.

The government's publicity machine is also used for party political purposes while Dáil Éireann as a legislature is dominated by the executive.

The evidence from elsewhere is that when dissent is drowned out, it manifests itself in extremist parties and street protests.

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© Copyright 2015 by Finfacts.ie

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