OPINION:Brian Cowen could find reassurance in the ESRI's medium-term review 2008-2015, writes Vincent Browne
HOLIDAY READING is mandatory in the south of Spain. Far too hot to be outdoors for most of the day. It has been 40 degrees for several days this week so far. We can watch Irish television so we know how awful the weather at home is. Even Newcastle West flooded! Fermoy and Mallow - the Sodom and Gomorrah of county Cork - deserved to be flooded. But Newcastle West? Two prostitutes were brought to Broadford (eight miles from Newcastle West) one time and did their business in a horsebox conveniently provided by a local entrepreneur. One of the prostitutes came from Mallow, the other from Fermoy.
My reading has included lots of stuff on Charlie Haughey, some of which has been interesting and illuminating. I also have been reading a recently published book, Descent into Chaos: How the War Against Islamic Extremism Is Being Lost in Pakistan, Afghanistan and Central Asia by a Pakistani journalist, Ahmed Rashid.
Ahmed Rashid is no raving leftie. He was educated at Malvern College, England, Government College Lahore, and Fitzwilliam College, Cambridge. He has been the Pakistan, Afghanistan and Central Asia correspondent for the Far Eastern Daily Telegraph. He writes for the Wall Street Journal. A previous book published in 2000, Taliban: Militant Islam, Oil and Fundamentalism in Central Asia, was a New York Times bestseller for five weeks, was translated into 22 languages, and has sold 1.5 million copies. He approved the 2001 invasion of Afghanistan by the US and its "coalition of the willing".
The book details the disastrous course of American foreign policy in the region, not just since 9/11. It tells how America financed the Taliban, via the Pakistani secret intelligence agency, ISI, and how ISI has been a funder, organiser, and collaborator of both the Taliban and al-Qaeda for a decade.
It shows how since the "success" of the 2001 invasion, the Americans have used warlords in the ongoing war against the Taliban, who have fought each other, fought the government of "President" Karzai and boosted the opium trade.
But the more interesting part of the book (so far) is how the "problem" in that part of the world resides not in Afghanistan but in Pakistan itself, a country with nuclear weapons, where al-Qaeda is virtually part of the state infrastructure. He also details how several neighbouring central Asian republics, notably Uzbekistan, are deeply unstable, unequal, repressive and breeding grounds for Islamic extremism.
From this perspective, the American engagement in Iraq has been disastrous, for it has fuelled the anger in much of the Islamic world against the West, boosted al-Qaeda across the central and southern Asian region, thereby making the world far more dangerous than it was before, maybe ever (given the nuclear dimension).
My other reading has been more reassuring and I certainly would recommend it to Brian Cowen, Mary Coughlan and Brian Lenihan as a relief from their turmoil. It is Medium Term Review 2008-2015 by the Economic and Social Research Institute (ESRI). I would recommend it generally were not the price of the publication (€100) so prohibitive.
The ESRI has had an impressive track record in forecasting the medium term (five to seven years) since it started such projects in 1986. In that year, in the midst of the Irish depression, it forecast the economy would grow at an annual rate of 2.8 per cent over the following five years. Several people thought at the time this was pie-in-the-sky dreamed up by the son of the then taoiseach, John FitzGerald. It turned out to have been pie not high enough up in the sky, for the economy grew at an annual rate of 3.2 per cent.
The ESRI consistently foretold an optimistic economic performance for 15 years and only once did it present an over-optimistic scenario - that was in 1989 when it forecast growth over the following five years at 4.9 per cent per annum, whereas it turned out to be only 4.4 per cent. It correctly foresaw the downturn we are currently experiencing and urged the government to adopt what is known as a counter-cyclical policy from 2000 onwards but to no avail. But now it is telling an optimistic story again: that within a year - or at most two years - strong economic growth will resume (about 3.5 per cent per annum) and that this will continue until about 2015 at least and then moderate only slightly. They are even predicting the housing market will begin to recover in a year or so.
And the reason for the optimism is essentially that the new recruits to the labour market are better educated than those retiring from the labour market and therefore more productive. Also there are more new recruits to the labour market than there are retirees, which means that there is a double boost to the economy - more labour recruits and better-educated labour recruits. The more educated people are, the more productive they are and the less likely they are to experience unemployment. And we are better placed than most European countries because we got educated later than they did - for instance in Germany the new recruits to the labour market are no more educated than the retirees. But we could screw it all up, as was done by the government since 2000.
So, failing a nuclear holocaust, things should be okay."Fermoy and Mallow - Cork's Sodom and Gomorrah - deserved the flood. But Newcastle West?