Fintan does it again

Torturing data and language should be a crime against humanity

Chris Johns

If I wanted to score a political point I wouldn’t take one dodgy statistic, misunderstand it (deliberately or not), misrepresent it (deliberately or not) and then conclude, on the back of it, that Ireland is a failed state. I would not expect to be taken seriously if I did.

Imagine my surprise when Ireland’s leading economist, Fintan O’Toole of The Irish Times, took a tiny sliver of the data contained in the recent report of the National Competitiveness Council, and concluded, “…it is excruciatingly obvious that the Irish economy, left to its own devices, cannot and will not match the investment of capital to human needs for shelter and security.”

Ireland’s last remaining celebrity economist gives a severe beating to both language and data. If there isn’t a United Nations agency headed up by Mary Robinson to deal with this kind of egregious abuse, there should be.

“Human needs for shelter and security”. What does this mean? Security is a big word. Ireland shelters under NATO’s security umbrella - does the famous economist approve? Or does he embrace energy security, something of which that the country possesses precisely zilch? Or do we need to be made more secure from GBH of our sensibilities from Ireland’s National Treasure? Bus shelters are less vandalised.

Back to economics. The NCC report quotes one number of relevance, in two different ways. It’s a ratio, one number, arrived at by dividing a denominator into a numerator. Our columnist spots that the ratio is ‘low’. Lower than in many other ‘capitalist economies’ (hint: there is a clue there about the author’s political leanings).

What a shocker! Ireland has a low ratio! May god forgive Varadkar! There is no mystery: the coalition has targeted a low ratio and stands condemned in the court of Fintan. Guilty of a capital offence with punishment to be administered accordingly.

That ratio? Housing investment as a proportion of total investment. Or housing investment as a proportion of the economy (measured in all sorts of ways). In Ireland, for one year, the NCC quotes and charts these housing numbers in one tiny part of a 94 page report with lots of other numbers. Data and charts that provide much food for thought, much nuance and subtlety. But our columnist takes this housing data and tortures it until it signs the required confession: It’s low! The state has failed!

No matter that there are issues with both the numerator and the denominator. I could write a whole post about how ‘housing investment’, ‘gross fixed capital formation’ and ‘GNI*’ need understanding and careful deployment. Do that, and you will not reach the same conclusions as does Fintan. Let’s put those issues aside.

Instead, think about this: the ratio is for one year only. No time series, no context. Even if the ratio means what Fintan thinks it does (spoiler alert: it doesn’t), the fact that it exists for one year only, proves precisely nothing. Nothing at all.

Also, our economics correspondent says that because the ratio is low, the private sector is, therefore, guilty of making it low. It’s the private sector’s fault. Hence, going forward, the state must assume responsibility for making our ratio bigger. Mathematically, that will involve either/or doing more housing investment (exclusively by the state) or shrinking the economy (the approach I think favoured by our favourite correspondent and Sinn Fein).

We should argue it the other way: think about NIMBYism, other vested interests, demonisation of the private sector (tax them, regulate them, call them vulture funds), and promise to elect Sinn Fein. All of this sends private developers screaming out of the door. The entities who know how to do housing, don’t do Irish housing.

The National Treasure’s solution: get the state to build houses. A state with with no institutional or operational memory of building houses. The state has to be part of the solution but not, as argued by Fintan, The solution.

Our columnist offers a single transferable answer to every question: The State’. Peer through that lens and you will see through every article he writes. And yet he always writes about State Failure. Spot the problem? Schoolboy stuff.