Central Statistics Office and OECD

March 28, 2014

 disappointed

Walking the plank

http://www.taoiseach.gov.ie/attached_files/Pdf%20files/Bodies%20in%20Ireland%20with%20Regulatory%20Powers.pdf 

Declan Purcell in “A Rough Guide to Irish Regulators” writes:

“After considering lots of alternatives, we eventually defined a regulatory body
as one that has statutory recognition, and has functions in at least two of the
following three areas of activities:

1. The formulation of goals, the making of rules, [and/or] the setting of
standards;

2. Monitoring, gathering information, scrutiny, inspection, audit and
evaluation;

3. Enforcement, modifying behaviour, applying rewards and sanctions.

In addition to its regulatory role, to qualify for inclusion a regulatory body
also had to have the following features:

  •  It is an independent organisation, separate from any other body
  •  It has some capacity for autonomous decision-making
  •  There is some expectation of continuity over time
  •  It has some personnel and financial resources.”

http://www.tca.ie/images/uploaded/documents/2008-11-26%20A%20Rough%20Guide%20to%20Irish%20Regulators.pdf

There is a thin line to be drawn between political appointees without power or expertise and individuals and organisations with a clearly defined mandate and set of deliverable expectations for which they in turn are made accountable.

Political appointees so-called ‘representatives of the public interest’ did not serve us well as members of the boards of banks. ‘Regulators’ political appointees to various boards and agencies in the state with little or no knowledge or expertise in the field of operation of the agencies in which they operate signal corrupt state involvement rather than regulation.

If loose regulation fails eg in the financial sector, it needs to be abandoned and replaced with effective regulation.

Consideration should be given to the franchising in the private sector of effective regulatory bodies with clear and distinct terms of reference. Liaison with the academic and university sector should be considered to further refine the effectiveness of regulatory bodies. If targets are not met, such organisations should be replaced.

There are in excess of 250 regulatory agencies in Ireland and there is a clear need to monitor the monitors.

Central Statistics Office and the ESRI

The CSO instead of shining light on the Irish economy has instead taken on the role of wish fulfillment and propaganda as it muddies the waters. However, In some areas it provides a useful and effective service eg in provision of national census, but its tool base is blunt.

CSO could do with an overhaul to make its procedures more effective and useful. When useful empirical data is obscured and becomes a propaganda tool, time for change has arrived. It also along with many other agencies of the state, is a victim of austerity.

A misleading propaganda tool used by the Central Statistics Office is the notion of percentage growth:

“Irish Economy 2013:  The CSO said today that preliminary estimates for the third quarter of 2013 indicate that GDP (gross domestic product) increased by 1.5% in volume terms on a seasonally adjusted basis compared with the second quarter of this year while GNP increased by 1.6% over the same period.”

Let’s leave out the mumbo jumbo of ‘seasonally adjusted’ which is not defined but added in there to cover all bets if the figures are wrong, which they are.

The figure will be seized upon by every hooray Henry in town to beat the drum of ‘turning the corner’, ‘the tiger is back’.

The final quarter of 2013 showed a decline of -2.3% and according to official figures the overall decline for the year was -0.48%.

It’s not without coincidence the budget is about that time of the year to benefit most from the misleading 1.5%.

Slicing figures into seasonal and quarterly figures allows for false information disguising underlying trends. Such figures need the accompaniment of real annual figures and charts for a 5 year period or more to show in real terms the real underlying trends upon which percentile calculation is abstracted.

Certain methodology used by the CSO tends to obscure and distort the information upon which data is based. One method is the presentation of accumulated data based on percentage change. Becoming more popular representation of data in this form is favoured by stock brokers who bet on it.

If I sell you 6 apples or properties in 2012, 3 apples or properties in 2013, I see how many apples or properties are being sold over the 2 years. Percentile change 50%.

However, charts using ‘Percentage change’ can lead the uninitiated into the territory of propaganda and misleading, incorrect assumptions.

http://www.math.umb.edu/~joan/MATHQ114/change.htm

If you cast your eye over a series of absolute figures for GDP over a five year period, its easy enough to absorb the real figures and make a rough guesstimate of decline or growth trends in terms of real figures.

But even the OECD(see later) disguise real figures by giving GDP and GNP in terms of annual per capita values.

It should be obvious to you that if GDP figures are in decline, that decline can be hidden by measuring GDP per capita in a declining population due to emigration.

Its also noticeable that such figures are given in a way that does not account for unemployment patterns or numbers at work.

However, lets say I describe ‘percentage change’ in the sale of apples between 2013 and 2012:

6-3 = 3 divided by 6 and multiplied by 100 or ((6-3)/6) * 100 = 50%

The figures describe a large change relative to the figures used.

But the figures themselves  upon which the changes are based are not given to me, only the change. Percentile change is more a tool of gambling stock brokers on the markets, than a tool of real information.

For example, unless I’m told whether the figures are based on unit apples or millions of apples, or how many there are unemployed or emigrating, percentage change on a sliced up basis of a month or two, can give a false overall assumption.

Dumping percentage change modelling should be done immediately unless clear relationships to more fundamental changes on an annual basis are given with built in error checking based on standard models of standard deviation.

Little accompanies these charts to show the type of modelling done to obtain the results upon which the data rests along with equivalent models of error checking

Real figures that have been subject of standard deviation error checking should be given to the analyst to enable cross checking of data. The analyst could calculate the percentage change quarter for themselves.

For example, analysts need to know the numbers of new mortgages given out in a chart comparing like for like on an annual basis over a five year period, they can do percentile change calculation themselves; they do not need percentile change data without  real underlying figures upon which they are based.

Percentile change modelling leads to propaganda such as recent “30% rise in mortgage lending”. This could represent properties  based on 13 this year against 10 properties selling last year!

CSO GDP percentage change figures often disguise falling GDP in Ireland leading to false assumptions on a return to growth.

Falling GDP overturns figures predicating debt sustainability and growth and our ability to repay our ‘bailout’.

Growth rates of in excess of 2-3% are used by the ESRI  to model Ireland’s recovery.

It would be helpful if the Irish Central Statistics office had a page with an Irish debt meter with repayment schedules for various bond due dates, analysis of percentage change, percentage of GDP/GNP and comparisons of debt repayments vs budget expenditure from various departments eg health/education.

NAFIG1It doesn’t.

It would  be helpful if some external agency took a critical look at its procedures and processes over the past decade to assess its fit for purpose for  data accumulation assisting in policy formation.

Accumulation of data on employment/unemployment, number of businesses opening/closing, emigration patterns, rising/decreasing levels of taxes and charges, demographics of population changes, statistical and comparitive trans national data on our debt burden would  help as well and represent a considerable resource for policy makers to consider.

But information from CSO is frugal limited in the main to a national census instead of, for example, interrogatory methods for eliciting spending requirements in various government departments:

The CSO however seem complacent enough with the job they are doing, provide no information on ‘what new demands for statistics’ they mention below.

In fact it looks like there will be a culling of their work in “the identification at EU level of statistics which are no longer needed”

http://www.cso.ie/en/media/csoie/releasespublications/documents/corporatepublications/StatementofStrategy201214.pdf

“Statistics: Information for Ireland – CSO’s Key Priorities 2012-2014

Goal 1 Meet Statistical Needs

The actions under this goal aim to deliver our existing core annual statistical
programme; and, wherever possible, improve timeliness and quality, and meet new
demands for statistics. We will continue to review the core programme and contribute
to the identification at EU level of statistics which are no longer needed.”

I’m sure the Irish CSO would argue its a victim of austerity itself. It might even argue it has been somewhat made redundant by our membership of the OECD.

OECD provide a statistical profile of Ireland here:

http://www.oecd-ilibrary.org/economics/country-statistical-profile-ireland_20752288-table-irl

“Country statistical profile: Ireland 2013”

Latest figures for 2012, Inflation is down to 1.7% and declining. Not good for a growing debt burden that won’t be inflated away. Declining GDP put a lie to the required growth rates of 3%+ to make our debt burden in excess of 120% debt to GDP, manageable.

The figures in the above table(link above) come close to giving you the real GDP but then obscure the data by instead giving GDP and GNP per capita.

Household disposable income annual growth has declined from 8.2% in 2005 to -3.9% in 2011 no doubt because of austerity, increasing taxes/charges, accompanied by a reduction in state services across the board. Curiously, the figures are not given for 2012.

Real GDP growth is flatlining at 0.2% following declines of -2.2% in 2008, -6.4% in 2009, -1.1% in 2010 and 2.2% in 2011. Public and private expenditure in health for 2012 is not given at all, but private expenditure on health is growing as people, clients and practitioners flee from  health service cutbacks.

Total tax revenue is another omission in the table along with others.

OECD has usurped what should be the function of the IRISH CSO in giving these figures. We do not get comparison charts for Ireland vs other OECD states. But you can dig out the profiles of other countries from their OECD charts.

If we want a look at the effect of the banking bailouts on general government debt, a useful publication is Fitzgerald and Kearney’s 2011 research in 2011(a). But beware how the approx €30bn sent to NAMA is hidden in a SPV and not given as part of general government debt.

Note especially the approx €30bn + of taxpayers money sent to bailout the bondholders of the odious Anglo Irish Bank. Note especially the failure of the present FG/LB government to negotiate a write down of Anglo debt settled by way of promissory notes recoined into new commercial obligations by way of long term bonds.

The marginal write downs and repersuasion of promissory notes into long term bonds is tauted as success by Irish negotiators. In reality, this was a grab and go exercise of the troika in the face of a just demand of full writedown of this debt foisted under false pretenses upon Irish tax payers.

We have yet through a full banking inquiry to get full disclosure on the project that led to failure to have senior bondholders of the banks including Anglo, written down. Negotiations on the promissory notes added to the failure.

(a)http://www.esri.ie/UserFiles/publications/QEC2011Aut_SA_FitzGerald.pdf

The €30bn+ sent to NAMA is cloaked away and hidden from scrutiny by the Irish Freedom of Information Act.

Nobel prize winning economists such as Joseph Stiglitz warned that NAMA was squandering public money http://en.wikipedia.org/wiki/National_Asset_Management_Agency At the time of its setting up proponents argued for it to succeed, annual growth rates in the order of 3%+ were required.

NAMA can selectively manage its portfolio to use the good bits to hide the bad.

Similar growth predictions of 3%+ were used to vindicate the belief the Irish economy could survive its bailout.

It appears annual growth rates at these rates are not being met.

Quarterly statistics based on percentage change modelling do not give a true picture of the real decline facing the Irish economy over the past number of years and its decline going forward into the future.

With declining GDP the outlook for the economy under austerity is not looking good.

It was essential for europhiles to give a good news story to restore confidence in the Irish economy’s

NAFIG1ability to survive and thrive under its self imposed regime of odious debt and bailout.

Central Statistics Office to the rescue.

From last blog:

“Writing in the Sunday Independent 2 March 2014 P26, Colm McCarthy made the interesting observation that employment statistics quoted ad nauseam by members of the coalition in support of an employment turnaround in the Irish economy, are suspect. The CSO on this blog has been questioned before as to its role as propaganda arm of the state rather than true pursuit of objective and scientific analysis of data.

“The CSO conducts a quarterly household survey which provides the most comprehensive picture of trends in the labour market. Unfortunately, the figures for employment in agriculture have been distorted by methodology changes and they are making the overall picture look better than it really is. Over the last two years total employment has grown by just under 60000. But 37000 of this increase is supposed to have occurred in farming. Farm output has changed little over that period but on-farm employment appears to have grown by no less than 46%. Non farm employment has performed as indicated in the accompanying table below.”

I’m unaware of a massive increase in employment in the agriculture/farming sector. CSO figures showing a growth in GNP are also suspect.

GDP is set to decline further due to the ‘end of patents’ pharma scenario. Its very odd that phantom jobs in the farming sector are appearing justifying alleged growth in GNP just in time to balance declining GDP that cannot be hidden!

Pharma 

Note the following paper does not account for the replacement of pharma products going out of patent. In the short to medium term there would appear to be no replacement scenarios lucrative enough to fill the losses due to current end of patents. suffice it to show there are no scenarios with Irish GDP on a steep growth path to make our debt sustainable.

http://www.finance.gov.ie/sites/default/files/The%20Impact%20of%20the%20Patent%20Cliff%20on%20Pharma-Chem%20Output%20in%20Ireland.pdf

“This paper sets out a number of simulations which use various export declines and import responses and suggests a net impact of a loss of 2 to 4 percentage points from GDP over a four-year horizon,depending on assumptions used. Corporation tax would probably reduce due to lower profitability in the sector. These simulations are illustrative only, and do not account for substitution on the supply or demand sides of the economy.”

“The sector is facing a number of challenges at present relating to over-capacity, significant R&D costs, a weak pipeline of new products and downward pricing pressures from healthcare payers”

“The current ‘patent cliff’ refers to a number of blockbuster drugs with about €200 billion in total global annual sales, which are set to go off patent  between 2011 and 2016, the majority of which are concentrated up to 2013.

Taken as a percentage of global sales, the patent cliff impacts on about a quarter of the value of the sector.”

“Corporation tax rate – Ireland has a corporation tax rate on trading income of 12.5 per cent.

Ireland is home to nine out of the top ten global pharma/biopharma companies and manufactures in part or full six of the top ten blockbusters drugs 15
coming off patent between 2011 and 201616.

This includes the bestselling drug in the world in 2011.”

“Exports of pharma-chem products (using our definition of SITC categories 51 and 54 in value terms) grew solidly to almost 30 per cent of GDP in 2011. Since mid-2012, exports of both categories in value terms have been on the decline (Figure 5), although the pace of decline has slowed in the early months of 2013. The year-on-year fall in pharma-chem products is the largest sustained decline in recent years. It contrasts sharply with strong performance over the past half-decade or so, which included only a very slight contraction in 2008 when global trade was particularly weak. The weakness in pharma-chem exports has also been reflected in overall merchandise trade performance too. In real (volume) terms merchandise exports fell by 5.5 per cent year-on-year in the first half of 2013, leading to six successive quarters of year-on-year contraction.”

“A number of illustrative simulations which use various export declines and import responses suggest a cumulative loss 2 per cent of GDP in a small decline scenario and 4 per cent of GDP in a large decline scenario over a five-year horizon. Corporation tax would probably fall due to lowerprofitability in the sector.”

We need to return to a real economy

Professor Garelli of http://www.imd.org/news/World-Competitiveness-2013.cfm

“In the end, the golden rules of competitiveness are simple: manufacture, diversify, export, invest in infrastructure, educate, support SMEs, enforce fiscal discipline, and above all maintain social cohesion,” concluded Professor Garelli.

Ireland has failed to end the debt extraction/extortion imposed by the troika.

Import substitution and manufacture should be a top priority. A return to values that are not financial service chicanery and redundant enslavement to a tax haven status serving the rich and built on extortion of the poor, should be abandoned.

A poorly conceived Euro project that has not served Ireland well needs to be brought to a close.

End

1. http://namawinelake.wordpress.com/2013/04/25/irish-residential-property-prices-continue-to-decline-march-2013-cso-indices-published/

2. http://www.thejournal.ie/central-statistics-office/news/

3. http://www.thejournal.ie/irish-enterprises-1008704-Jul2013/

4. http://www.cso.ie/en/releasesandpublications/statisticalyearbookofireland/statisticalyearbookofireland2008edition/

5. http://www.tradingeconomics.com/ireland/gdp-growth

6. http://www.finfacts.ie/irishfinancenews/article_1027014.shtml

7.  http://www.finfacts.com/celtictigereconomyireland.htm

8. http://www.cso.ie/en/studentscorner/nationalaccounts/thegrowthrate/

9. http://www.tradingeconomics.com/ireland/gdp-growth-annual

 

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