Never waste a good crisis

I am a big fan of the Irish economic commentator David McWilliams, not least of his brilliant ability to state my views much better than I can and his essential maxim that “what is important is never complicated and what is complicated is never important”. He recently won the award for Ireland’s “‘most influential Tweeter”. If only! Ireland (North and South) would be an awful lot better if he had more real influence!

I agree with him almost entirely again here – it’s really, really worth a listen. He most particularly challenges economists for ghetto-ising their knowledge by surrounding it in impenetrable jargon, leading to a lot of impotence and anger among the public.

The article’s headline is a little misleading. Mr McWilliams doesn’t quite say that humanity is incapable of learning from mistakes (admittedly he does flippantly say we don’t learn anything; a little extreme!) – quite evidently it is capable of doing so. What is true is that people are emotional; and also implicitly that we are products of our culture – the framework for our own actions/emotions and the actions/emotions of others. Entire societies function in this way.

Trying not to be simplistic but… the United States is flavoured by the fact it was founded by people at great risk spreading west across a continent, so of course it has a gun culture and an individualistic attitude to health; Germany is flavoured by wild inflation and a mad murderous dictator, so of course it is austere and prefers consensus to “charismatic leadership” now; England does evolution not revolution, so surely you didn’t seriously believe the “Vow” for vast constitutional change within months?!

So what’s this about never wasting a good crisis? If I were advising, say, a Commission set up to advise the potential next UK Government on the NI Economy I would suggest two things are core to this before we even begin:

– Northern Ireland has its own culture within which solutions must operate (theoretical academic solutions are hopeless, we need practical solutions in tune with our emotions about who we are and what is feasible); and

– keep it simple (leave out the complex stuff, just focus on the simple issues of revenue and spending, exporting and importing, receiving and contributing).

What is really necessary is a 30-year vision for Northern Ireland. If you go long term, you actually find it easier to get buy-in. Then, focus on the simple points. These include:

– you cannot spend money you don’t have (it doesn’t matter why you don’t have it);

– when you do spend, it should be on the basis of value (there’s no point spending “on the basis of need” if it doesn’t solve that need);

– it’s easier to raise revenue than reduce spending (remember the endowment effect – people value what they have more than what they could have, so once something is done “by the State” it becomes almost impossible to suggest subsequently that it shouldn’t be);

– to deliver change you have to make choices and these will make you unpopular (unpopularity is a sign you are doing something right – but is distinct from disengagement, which isn’t);

– people will support change they feel involved in even if they disagree with it instinctively (and they will oppose change they feel detached from even if they agree with it instinctively); and

– emotions (including issues of identity and religion) matter to people – they are what makes us interesting humans rather than boring robots.

Can we agree these things for the future and thus not waste the current crisis?

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