“IT’S JUNIOR CERT economics,” David McWilliams says of this week’s budget and the by-now infamous First Time Buyer (FTB) rebate.
McWilliams, probably the country’s best-known economist (certainly its most visible), is telling TheJournal.ie why the whole FTB thing is so problematic – which was the general gist of a column he wrote for the Irish Independent last week.
That piece was billed as “all the good work to halt a second property crash undone in a day”.
So he’s not feeling it, to put it mildly.
“Well it seems already that prices have started going up, which is exactly what I predicted, there’s stories doing the rounds about it. It’s hardly a surprise,” he says.
“The first time buyer thing was the one that really caught my eye,” he says of the budget. “In that it’s the one thing that makes least economic sense.”
If you have a problem of supply , then if you do something to boost demand you’ll see an increase in prices.
This is Junior Cert level economics we’re talking here. They certainly do this in pass level Leaving Cert economics.
McWilliams, for his part, is at a loss as to what made the Government think the €20,000 rebate on new build homes was a good idea.
“Unless they’ve been captured by the CIF (Construction Industry Federation), that’s all I could think of. I used to think Fianna Fáil was the builder’s party, but maybe Fine Gael are too,” he says.
So, are there any positives to be taken from this budget, which, regardless of whether you think it’s a good thing or not, clearly bears the pawprints of multiple parties and agendas?
“I don’t think so, you’ve got a weak government, propped up by independents, propped up by Fianna Fáil,” he replies.
It’s almost impossible to govern under those circumstances, everyone wants a couple of quid, a job here or there. It’s almost like a licence to legitimise parish pump politics.
Having said all this, McWilliams doesn’t seem too worried about the budget.
“The real problem is a long term one, in that the Central Bank and Department of Finance are clearly not seeing eye to eye,” he notes.
So the Central Bank brought in something progressive with the mortgage limitation rules, and then they’ve been undermined at a stroke with this first time buyer thing.
So what happens the next time they try to bring in something positive and sensible? Then people say ‘you know what, let’s wait until the next budget’ – and you’ve built up people’s expectations.
You have to understand that expectations play a prime role in determining where prices go, and if you think populism will dominate a budget then it tears up the integrity of the economic thrust towards long-term thinking.
“But,” he adds, “that’s human nature.”
When we suggest that maybe it’s more a case of Irish nature, he laughs. “Maybe. But that’s another conversation entirely.”
Agenda
McWilliams’ new show (or “new-old” as he describes it himself, it being a rebirth of a programme he presented between 1999 and 2004) Agenda hits our screens today at 12pm on TV3.
In the show’s promo, he signs off by simply saying “it’s good to be back”.
You get that sense talking to him now. It’s an economics show, but as he puts it “we want to get people thinking about things a little differently, to consider why things are the way they are”.
“It’s really lovely to be back on air.”
He has an objectively stellar interviewee line-up for programme one today. President Michael D Higgins will be in to discuss the plight of refugees among other things in the landscape of his new book When Ideas Matter.
But his two other guests are not Irish, and they’re intimately concerned with the two biggest international stories of the year – Brexit, and the improbable presidential run of one Donald J Trump.
To try and understand the groundswell of support for the controversial Republican nominee, the show has travelled to the US to meet with Ann Coulter. If that’s a name you’re unfamiliar with, she’s worth researching. Coulter is one of the most ferociously ultra-right wing media personalities in America.
She says things that even Trump might blanch at. She’s also one of his biggest cheerleaders.
“I’ve always been intrigued by things that people fear in private but wouldn’t say in public,” says McWilliams.
A lot of Americans feel a lot of nasty things in private – misogyny, anti-immigration, and what have you.
Coulter says things in public that people feel in private. And maybe she’s right. Tens of millions of people feel these things. Why shouldn’t she say what people think?
He describes her as “very chatty, very formidable in what she says”.
Likeable?
“Not really, but it’s important to get to the face of a movement that will get more than 40% of votes from the American electorate.”
Her books sell very well. Her book Adios America (her latest is called In Trump We Trust) came out two weeks before Trump announced his candidacy. It’s very clear if you read the book that he took lots from her.
Coulter, McWilliams says, was the one who came up with the idea for the infamous wall, not Trump. She was also the one who first posited a blanket ban on immigration.
He doesn’t think Trump will win come November. But maybe that’s not the point.
“I suspect on the night he’ll lose, but he’ll get 46% of the vote. And then the next Trump to come along will be much more palatable, and he or she will have a massive chance.”
No matter what happens, we’re at best one election away from some massive, massive societal change in America. Probably because whites will be in the minority by 2040.
Either a more palatable Trump will emerge, or we’re going to start seeing some Timothy McVeigh stuff.
McVeigh, the Oklahoma City bomber, killed 168 and wounded another 600 with a car bomb in April 1995 as he channeled desperate anger with his government (with Bill Clinton as president) into the worst incident of domestic terrorism the US had ever seen. It’s not a happy thought.
Brexit
McWilliams’ final guest will be Martin Wolf, writer with the Financial Times and “probably the best economics writer of his time” according to the Irish economist himself.
“We went to the UK to talk to him about Brexit and Trump. He’s wonderful.”
All his family were wiped out in the Holocaust. He’s the world through the prism of the 1930s, someone for whom that world is very, very real.
Wolf tells Agenda that the world needs a henchman (it’s been America for the past 70 years) to maintain stability. And, if America withdraws from that role (which is what Trump says he wants, believe him or not) “the world system will be smashed as we know it”.
“Mind you, everyone in the 30s was into appeasement,” says McWilliams. “And we know where that ended up.”
Wolf says that eventually one of these movements, the Le Pens, the Trumps, one of them will fall so far to he right that you can’t get back because the economic situation is just so ruptured.
He talks about Brexit. He was dead against it. Look at the UK government in the last two weeks, the lurch to the right, the policies they’re talking about, could you have imagined them coming out with those even a few months ago?
Sobering stuff.
Agenda debuts today on TV3 at 12 noon
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