Showing posts with label Paula Clancy. Show all posts
Showing posts with label Paula Clancy. Show all posts
Wednesday, 23 February 2011
From tiger to bailout
Ireland’s deep financial and economic crisis results from failings in its growth model, policy mistakes and systemic failures within European Monetary Union. The bail-out agreement with the IMF and the European authorities and the associated austerity package will not resolve the problems faced by the country and must be renegotiated. Instead a package is needed to promote economic recovery and jobs growth involving elements including: sovereign debt rescheduling and a lower interest rate, fundamental tax reform, and an investment programme financed by the sovereign wealth fund. That's the opening of an ETUI Policy Brief co-authored by former TASC Director Paula Clancy and Policy Analyst Tom McDonnell. The full paper is available for download here.
Thursday, 6 August 2009
Financial exclusion - a lucrative business for some
Paula Clancy: Last December, TASC organised a seminar on financial exclusion. The day before, Sean Fitzpatrick resigned as chairman of Anglo Irish Bank following revelations that, over a period of eight years to 2007, he had temporarily transferred loans with Anglo Irish Bank to another bank. Earlier, it had emerged that Mr. Fitzpatrick and his fellow directors had been granted loans totalling €150 million by Anglo.
The banking crisis which erupted towards the end of last year not only highlighted the crucial role played by financial institutions, both as providers of credit and as investment vehicles. It also showcased the manner in which those at the top of Ireland’s money pyramid reaped rewards from the financial sector during the good times.
Yet while those at the top were enjoying easy access to credit, not to mention generous bonuses for those working in the financial sector, many of those at the bottom of Ireland’s money pyramid were struggling to survive without a transaction bank account, a savings product or access to revolving credit (such as a credit card or overdraft).
They are the ‘financially excluded’, dependent’ for credit on legal and illegal moneylenders (there are currently 52 licensed moneylenders in Ireland, 36 of whom operate ‘doorstep collection’ businesses) charging exorbitant rates of interest. Without access to a bank account, they may rely on cheque-cashing operations for access to cash – at a price. Typically, cheque-cashers charge a percentage of the cheque’s value in addition to a handling fee.
Financial exclusion is a highly lucrative business for some.
Even at the height of the Celtic Tiger, business was also booming for 21st century pawnbrokers. One such operation – a global business with franchise outlets in Ireland - advertises its business in the following terms:
“[...] we provide today’s consumers with a modern, clean, professional and convenient environment in which to sell used or unwanted goods for instant cash. We also offer a great place to shop for pre-owned bargains plus a range of financial services catering for all sectors of the population including [those] who do not have access to bank accounts or mainstream credit facilities.”
And there’s no shortage of customers who have no choice but to avail of their services.
According to the most recent figures, 12 per cent of the Irish population suffers from financial exclusion – the fourth highest level in the EU-15. Financial exclusion is defined by the European Commission as “a process whereby people encounter difficulties accessing and/or using financial services and products in the mainstream market that are appropriate to their needs”.
Estimates of the number of Irish adults who are ‘unbanked’ (without access to any form of bank account, whether transaction or deposit) range from 10 to 19 per cent. While the unbanked may not be financially excluded, since they may have access to non-bank financial products, those who are financially excluded are almost always unbanked.
As the recession bites further, Ireland’s levels of financial exclusion are set to rise.
Research carried out by the Combat Poverty Agency prior to its amalgamation into the Office of Social Inclusion at the end of June has shown that income inadequacy is one of the primary factors factor driving financial exclusion, while research carried out on behalf of the European Commission has found that labour market changes are among the key causes of financial exclusion.
So what can be done?
We need to ensure that the current debate surrounding the role played by our banks also focuses on the banking needs of people living in poverty. In a welcome move, the bank recapitalisation scheme announced by the Government last December included a clause obliging banks to promote basic bank accounts to low-income groups. However, little progress has been made since and, apart from the fact that they will include cash cards free of stamp duty, the minimum features which will be offered by these accounts have yet to be defined, made public and debated.
In accordance with European best practice, the key features of a basic bank account should, in addition to a cash card, include the following: no minimum opening or monthly balance; free transactions, and flexible account opening requirements.
The obligation to provide a basic bank account should apply to all retail banks operating in Ireland, rather than only to those banks being recapitalised – which, in effect, will mean that the financially excluded will be limited in their choice of service provider.
In the short term, there is also an urgent need to ensure that measures taken address the economic crisis do not further exclude those at the bottom of the money pyramid. In this regard, the Government decision not to pay the Christmas Social Welfare bonus this year, which will increase the financial pressures on low income households, is likely to force families to resort to moneylenders in order to meet seasonal expenses during what is generally a bumper month for the moneylending industry. Likewise, the social welfare cuts recommended by An Bord Snip Nua, if implemented, will increase the risk of financial exclusion for many social welfare recipients.
In the longer term, the challenge is to ensure that reducing economic inequality in all its manifestations becomes a cornerstone of public policy.
Originally published as an opinion piece in the Irish Examiner, August 3rd
The banking crisis which erupted towards the end of last year not only highlighted the crucial role played by financial institutions, both as providers of credit and as investment vehicles. It also showcased the manner in which those at the top of Ireland’s money pyramid reaped rewards from the financial sector during the good times.
Yet while those at the top were enjoying easy access to credit, not to mention generous bonuses for those working in the financial sector, many of those at the bottom of Ireland’s money pyramid were struggling to survive without a transaction bank account, a savings product or access to revolving credit (such as a credit card or overdraft).
They are the ‘financially excluded’, dependent’ for credit on legal and illegal moneylenders (there are currently 52 licensed moneylenders in Ireland, 36 of whom operate ‘doorstep collection’ businesses) charging exorbitant rates of interest. Without access to a bank account, they may rely on cheque-cashing operations for access to cash – at a price. Typically, cheque-cashers charge a percentage of the cheque’s value in addition to a handling fee.
Financial exclusion is a highly lucrative business for some.
Even at the height of the Celtic Tiger, business was also booming for 21st century pawnbrokers. One such operation – a global business with franchise outlets in Ireland - advertises its business in the following terms:
“[...] we provide today’s consumers with a modern, clean, professional and convenient environment in which to sell used or unwanted goods for instant cash. We also offer a great place to shop for pre-owned bargains plus a range of financial services catering for all sectors of the population including [those] who do not have access to bank accounts or mainstream credit facilities.”
And there’s no shortage of customers who have no choice but to avail of their services.
According to the most recent figures, 12 per cent of the Irish population suffers from financial exclusion – the fourth highest level in the EU-15. Financial exclusion is defined by the European Commission as “a process whereby people encounter difficulties accessing and/or using financial services and products in the mainstream market that are appropriate to their needs”.
Estimates of the number of Irish adults who are ‘unbanked’ (without access to any form of bank account, whether transaction or deposit) range from 10 to 19 per cent. While the unbanked may not be financially excluded, since they may have access to non-bank financial products, those who are financially excluded are almost always unbanked.
As the recession bites further, Ireland’s levels of financial exclusion are set to rise.
Research carried out by the Combat Poverty Agency prior to its amalgamation into the Office of Social Inclusion at the end of June has shown that income inadequacy is one of the primary factors factor driving financial exclusion, while research carried out on behalf of the European Commission has found that labour market changes are among the key causes of financial exclusion.
So what can be done?
We need to ensure that the current debate surrounding the role played by our banks also focuses on the banking needs of people living in poverty. In a welcome move, the bank recapitalisation scheme announced by the Government last December included a clause obliging banks to promote basic bank accounts to low-income groups. However, little progress has been made since and, apart from the fact that they will include cash cards free of stamp duty, the minimum features which will be offered by these accounts have yet to be defined, made public and debated.
In accordance with European best practice, the key features of a basic bank account should, in addition to a cash card, include the following: no minimum opening or monthly balance; free transactions, and flexible account opening requirements.
The obligation to provide a basic bank account should apply to all retail banks operating in Ireland, rather than only to those banks being recapitalised – which, in effect, will mean that the financially excluded will be limited in their choice of service provider.
In the short term, there is also an urgent need to ensure that measures taken address the economic crisis do not further exclude those at the bottom of the money pyramid. In this regard, the Government decision not to pay the Christmas Social Welfare bonus this year, which will increase the financial pressures on low income households, is likely to force families to resort to moneylenders in order to meet seasonal expenses during what is generally a bumper month for the moneylending industry. Likewise, the social welfare cuts recommended by An Bord Snip Nua, if implemented, will increase the risk of financial exclusion for many social welfare recipients.
In the longer term, the challenge is to ensure that reducing economic inequality in all its manifestations becomes a cornerstone of public policy.
Originally published as an opinion piece in the Irish Examiner, August 3rd
Friday, 20 March 2009
Getting ideological
Paula Clancy: David Quinn is right about one thing: we do need to start asking ourselves what kind of society we want when we come out of the current crisis. I think most of the allegations in his column last Friday are unfounded, but any call for a real debate on the choices facing us must be supported wholeheartedly.
David seeks to blame the Left, in Ireland and internationally, for leading us into the current crisis; to absolve the “free market” of responsibility for the financial system’s destruction; and to transfer the blame instead onto out-of-control public spending.
For the last 15 years or more, economic commentary in Ireland has been dominated by economists promoting the line that inequality is good; public is bad; and, if the market and competition is allowed to do its thing, most of us will be rich. Most of these economists were rewarded handsomely for their pains. Those who were not directly employed by the banks and stockbrokers frequently had secure university posts which allowed time for consultancy services with regular access to industry, finance, government and the news media. Meanwhile, progressives who did warn about the flaws, inequalities and missed opportunities of the Tiger model were sneered at as jonahs, or dismissed as old-fashioned begrudgers, or both.
The attempt to absolve the “free market” and its fundamentalist ideologues of responsibility is more flimsy still. It is perverse to blame regulators – public servants, albeit overpaid – for the failure of a system which we were told was best with virtually no regulation, instead of blaming those running our financial services institutions who pocketed tens of millions of dollars in annual salaries while making what they now admit to be ‘poor decisions’. Last week, in response to an article which similarly blamed the regulators, one correspondent from a financial services firm wrote in the Financial Times “Excuse me, but, in the Anglo Saxon world, we were lectured incessantly – and arrogantly lectured others – that markets worked best when free of government intervention and with minimum regulation”. That says it all.
Out-of-control public spending is the other named culprit. Recent history tells a different story. Former President Clinton balanced the budget before he left office, but did so largely by slashing programmes for the poor. Of course, the second President Bush subsequently ballooned the deficit through massive tax cuts for the super rich and the illegal war in Iraq. The OECD, which has impeccable “free-market” credentials, said that Ireland's “public spending and employment growth has not kept up with population and GDP growth. Government policy has decreased the number of public employees as a % of the labour force and the overall public sector wage bill as a % of GDP. Compared with other OECD countries, government employment in Ireland is relatively low.” And, despite the scaremongering, Ireland’s national debt is not out of control. In fact, on current government projections, it will be only slightly higher than 60% in 2010, compared to more than 75% for the Eurozone as a whole.
It is not that progressives are fixated on a “big state” or “high taxes” per se. We do believe that the pursuit of equality is a sound principle for a successful society and ought to be a primary objective of public policy. Quality public services, universally available, are the single biggest contributor to such a society. For obvious reasons, we have as great, or indeed greater, interest than right-wing ideologues in ensuring that these are efficient, well-delivered and popular. It is, however, a fact that no country in the world has achieved the level of equality and public wellbeing that we should aspire to, with public spending as low as ours.
Our focus on equality is not just a product of the politics of envy. Reducing inequality is good for everybody, not just the worse off. Just read The Spirit Level by Wilkinson and Pickett for proof, across a whole range of measures, that people live longer, healthier and more fulfilling lives the lower the level of inequality in that country, city or community, regardless of wealth or per capita income. Inequality is simply bad for us all.
But there are some grounds for optimism. The election of Barack Obama might just signal the end of a dark age where growth and greed were the gods, and society was just a dump for the little people. Here in Ireland we did not escape the infection of the Reagan/Thatcher virus, so perhaps the slow wake of the PDs signals our recovery moment. The world which follows the current depression will be radically different, and we must recognize that we do not have the planetary resources to accommodate never-ending rampant growth, consumption and greed. We will have to work out an economic and social model which is more collaborative and can generate a better return in terms of individuals’ wellbeing than the consumption and ever-higher GNP model has managed.
David seeks to blame the Left, in Ireland and internationally, for leading us into the current crisis; to absolve the “free market” of responsibility for the financial system’s destruction; and to transfer the blame instead onto out-of-control public spending.
For the last 15 years or more, economic commentary in Ireland has been dominated by economists promoting the line that inequality is good; public is bad; and, if the market and competition is allowed to do its thing, most of us will be rich. Most of these economists were rewarded handsomely for their pains. Those who were not directly employed by the banks and stockbrokers frequently had secure university posts which allowed time for consultancy services with regular access to industry, finance, government and the news media. Meanwhile, progressives who did warn about the flaws, inequalities and missed opportunities of the Tiger model were sneered at as jonahs, or dismissed as old-fashioned begrudgers, or both.
The attempt to absolve the “free market” and its fundamentalist ideologues of responsibility is more flimsy still. It is perverse to blame regulators – public servants, albeit overpaid – for the failure of a system which we were told was best with virtually no regulation, instead of blaming those running our financial services institutions who pocketed tens of millions of dollars in annual salaries while making what they now admit to be ‘poor decisions’. Last week, in response to an article which similarly blamed the regulators, one correspondent from a financial services firm wrote in the Financial Times “Excuse me, but, in the Anglo Saxon world, we were lectured incessantly – and arrogantly lectured others – that markets worked best when free of government intervention and with minimum regulation”. That says it all.
Out-of-control public spending is the other named culprit. Recent history tells a different story. Former President Clinton balanced the budget before he left office, but did so largely by slashing programmes for the poor. Of course, the second President Bush subsequently ballooned the deficit through massive tax cuts for the super rich and the illegal war in Iraq. The OECD, which has impeccable “free-market” credentials, said that Ireland's “public spending and employment growth has not kept up with population and GDP growth. Government policy has decreased the number of public employees as a % of the labour force and the overall public sector wage bill as a % of GDP. Compared with other OECD countries, government employment in Ireland is relatively low.” And, despite the scaremongering, Ireland’s national debt is not out of control. In fact, on current government projections, it will be only slightly higher than 60% in 2010, compared to more than 75% for the Eurozone as a whole.
It is not that progressives are fixated on a “big state” or “high taxes” per se. We do believe that the pursuit of equality is a sound principle for a successful society and ought to be a primary objective of public policy. Quality public services, universally available, are the single biggest contributor to such a society. For obvious reasons, we have as great, or indeed greater, interest than right-wing ideologues in ensuring that these are efficient, well-delivered and popular. It is, however, a fact that no country in the world has achieved the level of equality and public wellbeing that we should aspire to, with public spending as low as ours.
Our focus on equality is not just a product of the politics of envy. Reducing inequality is good for everybody, not just the worse off. Just read The Spirit Level by Wilkinson and Pickett for proof, across a whole range of measures, that people live longer, healthier and more fulfilling lives the lower the level of inequality in that country, city or community, regardless of wealth or per capita income. Inequality is simply bad for us all.
But there are some grounds for optimism. The election of Barack Obama might just signal the end of a dark age where growth and greed were the gods, and society was just a dump for the little people. Here in Ireland we did not escape the infection of the Reagan/Thatcher virus, so perhaps the slow wake of the PDs signals our recovery moment. The world which follows the current depression will be radically different, and we must recognize that we do not have the planetary resources to accommodate never-ending rampant growth, consumption and greed. We will have to work out an economic and social model which is more collaborative and can generate a better return in terms of individuals’ wellbeing than the consumption and ever-higher GNP model has managed.
Tuesday, 3 March 2009
Comfort from US Heritage Foundation: we may be broke, but we’re economically free!
Paula Clancy: Looking for something else on the web, I came across Ireland’s entry in the 2009 Index of Economic Freedom, published by the right-wing Heritage Foundation in the United States. According to this entry, the Irish economy is the 4th freest in the world – and 1st in Europe. The report was obviously prepared some time late last year, and transports one back to a halcyon age where “Ireland’s efficient business environment continues to attract significant foreign investment” and our “competitive financial system [….] facilitates dynamic entrepreneurial activity” while “all financial institutions are in private hands” and Irish banks are “well capitalised”.
The report also lauds our “flexible labour regulations” which mean that “dismissing a redundant employee is relatively easy”, and notes approvingly that “the overall freedom to conduct a business is well protected under Ireland’s regulatory environment”.
With an astonishing lack of prescience, the Heritage Foundation – whose mission is to “formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense” – fails to discern even the glimmer of a dark cloud in this vista of economic freedom.
Now that the clouds are here, I guess we can comfort ourselves with the thought that we may be broke – but at least we’re economically free.
The report also lauds our “flexible labour regulations” which mean that “dismissing a redundant employee is relatively easy”, and notes approvingly that “the overall freedom to conduct a business is well protected under Ireland’s regulatory environment”.
With an astonishing lack of prescience, the Heritage Foundation – whose mission is to “formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense” – fails to discern even the glimmer of a dark cloud in this vista of economic freedom.
Now that the clouds are here, I guess we can comfort ourselves with the thought that we may be broke – but at least we’re economically free.
Monday, 23 February 2009
Towards a New Political Economy
Paula Clancy: Welcome to progressive-economy@tasc.
Economics has been described as the 'dismal science'. Economists are often stereotyped as conservative, wallowing in bad news, unfeeling and sometimes allied to powerful financial, economic circles and interests. Academic economics has acquired the reputation of being almost a branch of applied mathematics, with a series of assumptions and models that bear little or no relationship to the real world. Yet, formal theorising and selective empirical analysis has not stopped many economists from offering comprehensive advice and prescriptions to Governments or the commercial organisations that employ them. In the late 19th Century, 'Political Economy' was replaced by 'economics'. From then on, 'economics' began to assume a subordinating role in offering 'values-free' advice based on models of the world that reflected the inherent assumptions and interests of those who practiced and sponsored it. In short, economics has long been seen as the preserve of people with unique access to theory, information and policy wisdom - if only politicians and senior policy makers listened and employed more of them!
However, homo economicus has not saved the world.
TASC believes that it is time to reclaim 'economics' by rediscovering the political, social and cultural in 'economics'. We assert that economics is not, and cannot be, neutral. The very questions we seek to ask, the assumptions we chose to make and the options we decide to recommend are based on a set of values. More to the point, we propose a vision of a different society and polity - one in which people, meaningful relationships and human well-being are ends and not means to serving some other elusive goal. To compete we must also be ready to cooperate. A society that is best placed to be competitive and sustainable on global and domestic markets, we claim, is one that is founded on principles of social justice, equality and democracy where markets work to serve the common good and human rights are respected. A new Political Economy is one that opens up the insights of various disciplines to each other so that 'economics' takes its place in a dialogue involving many different academic disciplines as well as civil society, the world of politics and public discourse.
A new Political Economy must address the fundamental choices, values and alternative possible ways forward that the traditional practice of 'economics' shies away from. For this reason, TASC has created progressive-economy@tasc to provide a public forum for economic debate.
Peadar Kirby notes in his post, “we need to debate how the state and the market should relate to one another: in other words, what is the role of the state in configuring the market for social development and how should the state play that role?”.
I hope that progressive-economy@tasc can play a role in shaping and driving forward this and other debates.
Paula Clancy is Director of TASC
Economics has been described as the 'dismal science'. Economists are often stereotyped as conservative, wallowing in bad news, unfeeling and sometimes allied to powerful financial, economic circles and interests. Academic economics has acquired the reputation of being almost a branch of applied mathematics, with a series of assumptions and models that bear little or no relationship to the real world. Yet, formal theorising and selective empirical analysis has not stopped many economists from offering comprehensive advice and prescriptions to Governments or the commercial organisations that employ them. In the late 19th Century, 'Political Economy' was replaced by 'economics'. From then on, 'economics' began to assume a subordinating role in offering 'values-free' advice based on models of the world that reflected the inherent assumptions and interests of those who practiced and sponsored it. In short, economics has long been seen as the preserve of people with unique access to theory, information and policy wisdom - if only politicians and senior policy makers listened and employed more of them!
However, homo economicus has not saved the world.
TASC believes that it is time to reclaim 'economics' by rediscovering the political, social and cultural in 'economics'. We assert that economics is not, and cannot be, neutral. The very questions we seek to ask, the assumptions we chose to make and the options we decide to recommend are based on a set of values. More to the point, we propose a vision of a different society and polity - one in which people, meaningful relationships and human well-being are ends and not means to serving some other elusive goal. To compete we must also be ready to cooperate. A society that is best placed to be competitive and sustainable on global and domestic markets, we claim, is one that is founded on principles of social justice, equality and democracy where markets work to serve the common good and human rights are respected. A new Political Economy is one that opens up the insights of various disciplines to each other so that 'economics' takes its place in a dialogue involving many different academic disciplines as well as civil society, the world of politics and public discourse.
A new Political Economy must address the fundamental choices, values and alternative possible ways forward that the traditional practice of 'economics' shies away from. For this reason, TASC has created progressive-economy@tasc to provide a public forum for economic debate.
Peadar Kirby notes in his post, “we need to debate how the state and the market should relate to one another: in other words, what is the role of the state in configuring the market for social development and how should the state play that role?”.
I hope that progressive-economy@tasc can play a role in shaping and driving forward this and other debates.
Paula Clancy is Director of TASC
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