Investment in Education Should Not Be Held Hostage by ‘Bailout’

                                                                        (First published in 'The Irish Examiner' 23-08-2011)

The importance of Education to a country that aspires to be inclusive, democratic, and innovative could hardly be over-emphasised. Ireland has good reason to know this from our history: once we depended on ‘Hedge Schools’ to transmit a commitment to learning. In the face of massive economic uncertainty within the Eurozone, and across the global economy, investment in education is a key policy priority for promoting an economic recovery in Ireland

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Ireland’s economic recovery rests primarily on its people and our natural resources. The two are interrelated; to develop the technologies that can harvest our natural resources we need a creative and innovative workforce. In turn, developing these resources in the interest of Irish people will provide the funding for investing in education. We are a million miles from igniting this virtuous circle.

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This makes little sense for a country which has almost 36% of its population aged 25 or under. It makes even less sense when account is taken of the contraction in the employment, the rise in unemployment and involuntary emigration that has occurred over the last four years.

The reality is that the future of primary school children is being shaped, even now, by the decisions that are being made on education.

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The starting point for such decisions should be that we are currently under-investing in education, comparing with the OECD average. Ireland is a small, open and vulnerable economy, but one with a ‘golden demographic’, and with economic pressures bearing down on it, the like of which have not been experienced in our modern history.

In these circumstances ‘OECD average’ doesn’t begin to cut it – we need to be investing way above the OECD average, because it is these same OECD countries – and the ‘emerging economies’- with whom this generation, and the next, will have to compete if we are to make our way in the world.

In fact, investment in education is being reduced in absolute terms. Under current policies, dictated by the EU/ECB/IMF Bailout, it is going to be reduced even further. The government and, in fairness, the Minister for Education and Skills, know this to be the case. It has been made clear by the Troika, that even the cost of the ‘Jobs Package’ would have to be found from within the existing ‘Bailout’ limits.

Nonetheless, we are allowing our education policies, at this most critical time, to be held hostage to a mind-set that is contrary to educational research and common sense. Think about it: Ireland ‘borrowed’ some €33 billion from Eurozone institutions; Facebook, to take just one example of a knowledge company, has a current market valuation around €90 billion. We sold ourselves, and the freedom to decide what is in our vital national interests, short.

This enforced short-termism in cutting back on investment in Third level is wrong for three reasons.

Firstly, Ireland is first and foremost a ‘knowledge-based’ economy. In a book ‘Ireland and the knowledge Economy’ which I co-authored with the distinguished TCD physicist Prof. Vincent McBrierty  almost 15 years ago, we demonstrated the importance of investing in knowledge and creativity to a, then, sceptical policy audience.

Time has vindicated the proposition we advanced in relation to investing in a new ‘Techno-academic Paradigm’ and, more generally, the importance of investing in R&D and innovation within our Third Level. Ireland doesn’t have too many large companies investing in R&D: our Third level sector and our University Teaching Hospitals are of critical importance to the sustainability of our economy, and to the development, to the full, of our people and of our natural resources. The new paradigm which we wrote of is the ‘bridge’ from where we are, to where we are capable of being.

We have a robust and imaginative policy infrastructure in the HEA and in Science Foundation Ireland (SFI ). We have benefited enormously from pioneering policy makers like John Travers and from generations of researchers and entrepreneurs in our University’s and Institutes of Technology. A brief glance at SFI’s website will confirm just what our researchers are capable of achieving across whole swath of technologies and sciences. This is our real National Pension Reserve Fund.

What it boils down to is this; in order to attract, and retain, Foreign Direct Investment and, also, to continue to keep the ‘lights on’ in our increasingly IT-driven domestic economy, we need to invest in education, especially Third Level, since the outcomes feed directly into the productivity and innovation and competitiveness of the economy.

It is hardly tenable to argue that the EU/ECB/IMF ‘Bailout’ programme ‘does not allow’ us to invest in education. Indeed, the very fact that the Bailout is focused on short-term fiscal bookkeeping instead of medium-term strategic thinking, shows just how impoverished and counter-productive is the thinking on which the Bailout is based.

 It is precisely by investing in education that the growth necessary for recovery and for closer convergence across the Eurozone can best be assured. The irony, of course, is that EU Programmes in education and student/staff mobility – programmes like Erasmus – have been an unqualified success, providing a unique opportunity to generations of students to understand the richness of European culture, learning and research. The same can be said for the EU’s Seventh Framework Programme on Science and Technology. The EU Commission, as part of the ‘Troika’ should be aware of the wholly contradictory nature of its policy imposition on Ireland. Investment in education can rebuild the credibility that the Euro zone policies now so signally lack.

An overseas broadcaster covering Ireland’s economic plight recently put to me the question “why on earth’ is Ireland cutting back on investment in education at this time? How can one possibly explain to someone outside this country why, in three short years, we have managed to find ­€70 billion (including €25 billion allocated by the ‘Troika’ earlier this year) to recapitalize banks, which were close to the epicentre of Ireland’s debacle, and somehow, cannot find the €5 billion necessary to invest in higher education between now and 2020.

The second reason it is wrong has to do with social solidarity and, also, political stability. Investment in education is absolutely central to building an inclusive society. Many thousands are marginalised through lack of access to education, including Third Level. This has been a greatly exacerbated by the rise of Long-term and Youth unemployment.

A generation which we have deprived of employment opportunities are now facing even higher financial barriers to participation in higher education. This is destructive of the human Person and also of what is quaintly called ‘human capital’. The failure to invest in education is also sowing the seeds for a divided and fragmented society, one which is vulnerable to political instability.

The third reason has to do with what is actually being achieved within the Third level sector. No doubt, much more could be done, under the usual mantras of Value for Money and efficiency.

But the reality is that the third level sector has measurably delivered on both quality and commitment and outcomes. It needs investment. We cannot continue to ‘cannibalise’ the legacy that has been built up over the years by our teaching professionals, and by our researchers.

There is also a real danger that we are beginning to believe our own PR. Twelve months ago, an authoritative leader in a major multi-national, one who is seriously supportive of Irelands graduates, quietly pointed out after a seminar that he could see that for the first time standards ‘were slipping’ and that we were in real danger of being bypassed by countries who are more passionate about, and investing more in, education.

Ireland’s third level sector is now under severe stress. It’s not simply a matter of accommodating more numbers with fewer resources, it’s about building on – rather than reversing – participation rates in education; it’s about encouraging lifelong learning and, also, re-skilling in a traumatised economic environment. It is about sustaining – rather than eroding – critical mass in Post Graduate training, and research. We are long on vision and aspiration – and maybe that’s no harm. The vision set out in the Hunt Report does provide something at which to aim. But we are seriously short in delivering the kind of financial support and empowerment that our Third level needs.

The world of education, defined by successive Reports and Strategies and Task Forces, is becoming semi-detached from the real world of kids, and young adults facing increasing Third level costs when they cannot even get a part-time job; and from the hopes of parents for their children when confronted by everything from increased Third level fees to the pressures of getting kids back to school.

There is a real danger of becoming bogged-down in refined argument about student contributions and funding models. These are, of course, reasonable points, but they miss the ‘big picture’. That is, in terms of our natural resource endowments, we are a rich country that should be thinking primarily in terms of the right of all of our children, to the best education that we can offer so that they, in turn, can contribute to their community and their country, and to the raising of their families.

Ireland faces a budget, which is set to extract a minimum of €3.5 billion, from an emaciated economy. A country that can point to Newgrange, the Book of Kells, to Scholars who reanimated European learning in the early middle ages-- and to a level of scholarship in modern Ireland  out of all proportion to Ireland’s size,  is not in need of instruction about investment in Education from a ‘Troika’ driven by a  short-term Technocratic mindset.

 No Government or Minister for Education can take on this challenge by themselves. A consensus is necessary that, when it comes to our core social capital in Education and Health, a malign ‘Bailout’ must not be allowed to subvert our future –and common sense.

Failure of leadership in the eurozone means Ireland must exit now

This appeared in the printed version of the Irish Examiner Saturday, August 06, 2011

UNCERTAINTY, and even fear, again stalks global financial markets. All of the key market indices — interest rates, exchange rates, and bond yields — signal a profound level of uncertainty, not alone about where the global economy is headed.

But more importantly, they indicate a lack of confidence in policymakers. Nowhere is this more evident than in the eurozone. Market data signal that we are close to the end of the road.

What we have seen this week has been a massive shift by the markets into cash holdings, which reinforces recessionary pressures and signifies a vote of ‘no confidence’ in current policies and economic leadership. We have seen equities fall sharply, creating a real dilemma for institutional investors, including pension funds. We have seen perversely massive flows into US treasury bills, which does not reflect any intrinsic strength of the US economy but, quite simply, a lack of alternatives for very spooked investors. The VIX index, which measures market volatility, spiked this week at levels which indicate just how spooked the markets are.

The most striking feature of all this is that the global financial crisis has not gone away. In the eurozone, ‘leaders’ have attempted on two occasions to ‘fix’ the instability that is in fact built into the system.

Moreover, the two Financial Stability mechanisms — the more recent one to take effect in 2013 — raise serious issues regarding their constitutionally and compatibility with all of the provisions of the treaties.

There is little left that European ‘leaders’ can now throw at these problems. We need, even at this 11th hour, to be very clear and dispassionate about the events that are unfolding in the markets and their significance, not least for macro-economic management in Ireland.

The eurozone Troika — Germany, France and the ECB — have used up pretty well all of the policy instruments available to them to mitigate the crisis and to prevent it spreading — particularly to the US. They have failed.

These policies have been characterised by deep and very public differences, back-biting and by policy reversals. Hopelessly confused, they have exacerbated the underlying institutional deficiencies. They dissipated market confidence like some kind of spend-thrift.

The ECB, for its part, has effectively revoked its own Constitution which prohibits ‘bailouts’. Its balance sheet is stuffed with the sovereign debt collateral of countries on the brink of default. Its ability to conduct monitory policy has been subverted.

The punitive nature of the adjustments forced on countries as the price for assistance from ‘partner countries’ has been thrown into sharp relief by the recent deal on Greece. Interest rates were reduced from levels at which they should never have been set.

These concessions were extended to Ireland — not as a matter of policy, still less as a matter of principle, but as a necessity expediency revealing the paucity of any strategic vision regarding how to deal with this spiralling crisis. For the first time there was mention of growth and jobs. The case for such a rebalancing has been argued in these pages on many occasions. It found no resonance in either Irish economic policy or in the eurozone — until its ‘leaders’, thoroughly spooked by events spiralling outside of their control and by the collateral damage to the balance sheets of core European and also US banks, suddenly backed-off. The European Commission — which had censored the Credit Rating Agencies for the temerity of adding two and two, has found itself making the case for a fundamental revision of policy, and has been censored by Germany.

The eurozone now represents less a single currency areas than some kind of nightmarish ‘Hotel California’. Is it any wonder the markets have so little confidence and that this lack of confidence should now have morphed into a crisis encompassing the US, and, therefore the global financial system.

In the US, the 11th-hour agreements last week on raising the debt ceiling should not be dismissed as political theatre. The time period for adjustment is 10 years. The eurozone ‘authorities’ sought to impose on Ireland an adjustment in half of that time. But even more fundamentally, the stark reality is that, when account is taken of actual and contingent liabilities and the prospective growth rate, the US economy is in worse shape than Greece.

The economic forecasts on which Ireland’s budgetary policies — and the bailout — have been constructed, have now shown to be wholly wrong. So, too, have the policies. They simply aren’t working. All there is to show for all the sacrifices are a sovereign debt rating of junk status, a shrinkage of employment of 15% and ‘Closed’ and ‘For Sale’ notices right across the economy.

This is not leadership — it borders on the willful to adhere to policies that are demonstrably not working and that have mired the eurozone in a crisis, from which it is seemingly incapable of escaping. Ireland needs to leave.

It would, of course, have been far better had we left earlier — not through a lack of solidarity with fellow members of the EU; but simply because structural deficiencies in the eurozone itself are generating profound anti-European sentiment, paving the way for political extremism.

The argument has been made repeatedly in these pages that Ireland needs to pull out of a eurozone that is imploding. Ireland needs certainty and stability — and courage. We can rebuild our economy, and regain access to capital markets, on the basis of credible growth-based policies. 

Read more: http://www.irishexaminer.com/business/failure-of-leadership-in-the-eurozone-means-ireland-must-exit-now-163440.html#ixzz1UHliTVDr