ESRI in Denial
The Irish Times (Jan 12) has given free rein to the ESRI to cover up its past. Above all, ESRI failed to give adequate warning of the danger to the Irish economy from the combination of excessive bank borrowing abroad and excessive lending both at home and abroad.
The level of denial by the ESRI itself and the extent of the protection from criticism it has enjoyed in the media has particular dangers for citizens. The dangers in the current austerity policy are sure to be understated by ESRI if radical change in the governance of the Institute does not take place.
ESRI director is given the facility of a personal opinion piece in the newspaper, to-day Jan 12. In addition, under the heading “Director says ESRI economy warnings ignored“ Paul Cullen of the Irish Times political staff wrote an article which contained no quotations from anybody other than the ESRI director. I had been interviewed for half an hour on telephone by Paul Cullen in advance of the publication of the article. The article begins: “SUCCESSIVE GOVERNMENTS deliberately ignored warnings from the Economic and Social Research Institute about the dangers of an overheating economy, according to its director, Prof Frances Ruane. Prof Ruane yesterday defended the independence of the ESRI and the accuracy of its forecasting in the face of trenchant criticism last week by departing staff member Richard Tol.” In a third article, also by Paul Cullen, some criticism is carried including a criticism of the governance of the Institute by myself. This article says that the Institute circulated Morgan Kelly’s article (July 1997) predicting the “bust” without saying that the Institute had dissociated itself from it! As I explain below, the Institute was saying the opposite at the time.
What are the facts? The Irish economy was in mortal danger in Summer 2007. “Members of the Media should note that Professor Morgan Kelly is not a staff member of The ESRI. Whilst this Article has been accepted for publication by The ESRI, the views expressed are not the views of The ESRI”. This is the legend that accompanied the circulation by ESRI of the article by Morgan Kelly in July 2007 predicting the bursting of the property bubble and its consequences. There is no record in the article of the director being asked to explain this disclaimer.(The journalist had discussed this contention in my letter to all media with me)
But what was the ESRI itself saying at the same time in Summer 2007? In Spring 2006 the Institute had predicted a soft landing saying: “We add our voice to those expressing concern about the possibility of a bubble bursting. However, this does not imply that a sharp fall will occur. A soft landing is still the more likely outcome.” In its Quarterly Economic Commentary, Summer 2007, a “smooth transition” was predicted. “As the housing boom comes to an end, the economy must move resources to other areas of economic activity, such that the transition is as smooth as possible in terms of output and employment. We are optimistic that a smooth transition will occur and this is reflected in our forecasts for services and industry growth. However, if the current high rate of CPI inflation feeds into excessive wage demands, this could endanger a smooth transition. (Preamble to QEC, Summer 2007). And in its General Assessment, the same publication states : “With employment growth slowing, tax revenues growing more slowly than last year and early indicators of activity in house building pointing towards a slowdown, our task in producing forecasts has been to estimate whether the slowdown will be moderate or otherwise.For now, our belief is that the slowdown will indeed be moderate.”
The same publication pointed to dangers to their optimistic outcome. Was there any mention of excessive bank borrowing and lending? Not a word. The main danger was wage inflation according to ESRI. Government and employers cannot have been unhappy with that!
The contention in my letter to the media that the warnings were so understated as to be totally ineffective is more than justified. This is particularly so as the warnings were addenda to optimistic predictions at a time when the country was hurtling towards receivership.
Professor Richard Tol recently departed from the Economic and Social Reserch Institute. In an interview with Colm Keena (Irish Times Jan 2) he criticised the lack of academic freedom at the Institute. Read full article pasted below. As the role of the ESRI is to advise the government and the citizens on economic matters the statements made by Professor Tol should give rise to great concern. Yet ESRI had not seen fit to comment on these statements(Jan 2) until Sunday Jan 8. I believe that my letters to the media and my tweets played a role in eliciting the reply. The issue is covered in an article in Sunday Independent Jan 8 (Analysis, Daniel McConnell P8) and was discussed on Marian Finucane Show on Sunday Jan 8. Richard Toll, in the course of his interview with Daniel McConnell, stated “You work on the basis of professional integrity. In the ESRI you are not supposed to talk outside your area of expertise. That is perfectly acceptable. However, in the last two years or so there was quite strong pressure from the director to keep messages out of the media that are not politically acceptable or that might upset council members or funders.” A tweet by Richard Toll is also quoted:”It was funny to hear academics complain about distant threats to academic freedom. At the ESRI, we were muffled,” The ESRI has denied the allegations saying: “The allegations made by Richard Tol are wholly unsubstantiated.”The article from the Sunday Independent is pasted below.
In the course of the Marian Finucane Show distinguished Journalist, Sam Smyth said:”They say that if you live in Rome you shouldn’t fight with the Pope and there is a relationship between the state and the ESRI”. He seemed to be justifying the ESRI position. Of course, the lack of freedom for the ESRI and its researchers to criticise government policy is the core issue.
My letter(text below) to the editor on this matter was published in Irish Independent to-day, Jan 6
From Paddy Healy Convener of Campaign for Academic Freedom, 086-4183732
88 Griffith Court,
Academic Freedom and ESRI
“Members of the Media should note that Professor Morgan Kelly is not a staff member of The ESRI. Whilst this Article has been accepted for publication by The ESRI, the views expressed are not the views of The ESRI”. This is the legend that accompanied the circulation by ESRI of the article by Morgan Kelly in July 2007 predicting the bursting of the property bubble and its consequences. Professor Richard Tol ,who has recently left ESRI, is right when he says: “the institute did issue warnings about policy during the Ahern years, but did not do so loudly enough”.
In fact the warnings were so understated as to be totally ineffective.
The allegations of lack of independence and absence of academic freedom for researchers at ESRI by Richard Tol are a very serious matter for Irish citizens. The institute is largely funded by the state. Citizens are entitled to expect full and unbiased information in economic matters. The council of ESRI is a self-perpetuating establishment club. Candidates for election to the governing body must be pre-approved by a majority of the existing members of the council.
The remedy for this extremely unsatisfactory situation follows from the remark by Richard Tol “In a university you can say what you like if you behave responsibly. It’s not the same with the ESRI”. Clearly the ESRI should be subsumed into a university or other third level institute where academic freedom is either guaranteed by law or enshrined in contracts of employment.
Paddy Healy 086-4183732
Note from Paddy Healy
In 2005, as president of Teachers Union of Ireland, I was proposed for a vacancy on the Council of ESRI by Dublin Institute of Technology having been a member of the Governing Body and Academic Council of DIT for several years.
My nomination was declared invalid at the AGM as my candidacy was not “pre-approved” by the existing Council.
Economist criticises aspects of ESRI
Mon, Jan 02, 2012
ENERGY ECONOMIST Richard Tol, who has left the Economic and Social Research Institute (ESRI) to take up the position of professor of economics with Sussex University, has criticised aspects of the public think-tank.
Prof Tol said the financial position of the institute affected the independence of the work it produced. He said people who worked there were discouraged from expressing personal opinions to journalists or on social media sites such as Twitter.
Efforts to contact representatives of the institute were unsuccessful.
Prof Tol spoke to The Irish Times yesterday after he had posted a number of comments on Twitter about his decision to leave the ESRI after five and a half years. “In a university you can say what you like if you behave responsibly. It’s not the same with the ESRI,” he said. “If you violate policy and upset people, you can get into trouble.”
He said the institute’s independence was compromised by the fact it got so much of its funding from government. He said this could manifest itself in the way the research it conducts is put into the public domain.
He was critical of the standard of information technology available at the institute.
In one of his tweets he said it was not a coincidence he was one of five senior research professors who had left over the past number of years. The institute has about 40 research assistants and about 10 research professors, he told The Irish Times. “So five in the last five years is significant.”
The ESRI was set up during the Lemass era to improve the quality of policy analysis available to the government.
Prof Tol said the institute did issue warnings about policy during the Ahern years, but did not do so loudly enough.
He said the institute did not have a banking expert even though during the bubble years banking was one of the economy’s largest sectors. “So the whole thing of the bank crisis caught the ESRI from left field.”
The international financial crisis, he said, was caused by factors that the whole of the international economics profession believed could not happen. “So you can’t blame the ESRI on that.”
When Ireland was joining the euro the institute had warned that fiscal policy would have to take account of the new situation, but Charlie McCreevy then became minister for finance “and went in the opposite direction to where we should be going”.
This was criticised by the institute but not loudly enough, he said. “The ESRI can make its voice heard, but it didn’t.”
Prof Tol said the view of many people in the institute now was on the financial threat to its survival – and personal relief that they had a job.
He said there were many positive aspects to working in the institute, not least the people he worked alongside and the fact he was able to engage in applied research.
A native of the Netherlands, he said he would be sad to leave Ireland, which he really loved. However, his wife was a civil engineer and they had two children.
“Ireland is facing 10 years of austerity. Leaving Ireland is the best thing you can do at the moment if you are responsible for a young family.”
© 2012 The Irish Times
Daniel McConnell: A fearless whistleblower or a disgruntled crank?
The ESRI and Richard Tol are at war since the economist’s bitter departure, writes Daniel McConnell
It was a most bizarre image. The lead story on the main evening news on RTE showed a scruffy, long-haired foreigner packing up his house to move to England.
This same man starkly warned that despite cuts of over €24bn in government spending since 2008 Ireland faces another decade of austerity.
But most controversially, Richard Tol, non-conformist voice and energy economist, also had some harsh words for his former employers and colleagues in the State’s economic think tank, the Economic Social and Research Institute (ESRI).
During that RTE interview, he called into question the organisation’s independence and condemned it for a lack of transparency.
However, online — his favoured medium — Tol went for the jugular.
Over a 48-hour period, the 42-year-old Dutch academic made a host of serious allegations into how the ESRI operates, about its transparency, its relationship with Government and how it is funded.
Today, the ESRI hits back very strongly at the various allegations made by Tol online and during an interview with this newspaper. It vehemently denies the failings alleged by Tol, rejecting his outlook almost entirely. “The allegations made by Richard Tol are wholly unsubstantiated.”
His criticisms of the ESRI on television were somewhat muted and restricted, no doubt by the station’s lawyers, and Tol himself is bemused that his departure was given so much prominence. “It is a slow news day if the lead story is the hairy guy packing a box,” he tweeted.
But it was on Twitter that Tol made the most serious allegations about the organisation.
He accused it of being a xenophobic and nepotistic body which is caught in a timewarp using antiquated technology. He also stated that he was the fifth senior person to leave the institute, implying cultural and endemic problems at the ESRI.
“It was funny to hear academics complain about distant threats to academic freedom. At the ESRI, we were muffled,” he tweeted.
“The wife said: The ESRI reflects all that is good and bad about Irish society. She is right,” he wrote a short time later.
For those left behind in the ESRI, Tol is a trouble-making crank who has sought to wash his dirty laundry in public.
For others, in a country which has a shameful record of treating whistleblowers poorly, Tol was a welcome dissenting voice holding up a mirror to reveal our flaws as well as our strengths.
In the wake of his outbursts online, the Sunday Independent spoke to Tol to try and see if he would elaborate on the serious allegations he made about the state’s economic think tank.
According to Tol, the ESRI has many faults and many positives. The faults, he says, are incredibly serious and strike to the core of its credibility. He calls into question its independence and its transparency.
“Transparency is most important and at the ESRI the models used for our analysis is not transparent at all. The way it is, you aren’t sure who contributed what to a particular paper; accessibility to information is not there. This is one of the most serious issues affecting the ESRI,” he said.
I ask him about independence and academic freedom.
Tol detailed his often fractious relationship with his superiors within the ESRI, and said that clear pressure was brought to bear on him and his fellow researchers by the director of the ESRI, Frances Ruane, to keep “politically unacceptable” messages suppressed.
“You work on the basis of professional integrity. In the ESRI you are not supposed to talk outside your area of expertise. That is perfectly acceptable. However, in the last two years or so there was quite strong pressure from the director to keep messages out of the media that are not politically acceptable or that might upset council members or funders.”
He said that he had fallen foul of Ruane’s instructions and was disciplined as a result.
“The ESRI is supposed to be an academic institution,
where you can speak on the basis of evidenced-based analysis. Disciplinary measures have been taken. Pressure came in the form of conversations, emails and letters. Such measures have been taken against me. I have had many conversations with the director, so my comments would not have come as any surprise to her,” he said.
In response, the ESRI said: “ESRI researchers are free to participate in public debate. There are no restrictions on ESRI staff members discussing their research in whatever forum they deem appropriate. Indeed, research staff members have participated in wide-ranging discussions in many media outlets.”
The Sunday Independent has obtained a copy of the institute’s protocols for publishing material, and researchers are subject to a host of detailed instructions in how to “disseminate” information to the public.
Researchers must run press releases by the director or her nominee before release, and opinion pieces for national publication in a newspaper must be cleared by a colleague, head of division or the director before being submitted. Researchers are permitted to upload material to certain websites like the Irisheconomy.ie without clearance from superiors if it is in their field of expertise.
“Staff at the ESRI know there is a policy about the relaying of information and are expected to adhere to that policy. If they don’t, disciplinary measures are utilised, and were in the case of Richard Tol,” the ESRI spokeswoman said.
Tol was also critical that websites such as Twitter and Facebook were blocked for staff by the ESRI, reflecting an attitude toward technology more suited to the 1990s.
Tol’s statements about xenophobia and nepotism are the most controversial.
He alleges that within the ESRI, those from Ireland were in someway treated above those from foreign countries, which impacted on people’s career prospects.
He said: “There was a hierarchy within there. It was native Irish first, then English, then European, then others. This impacted on how fast you got promoted.”
The ESRI has strongly refuted any suggestion of favouritism, saying it has staff from many nationalities currently employed there. It stated it has fully developed human resources policies and such a scenario just simply couldn’t occur.
Tol went further, alleging that racist complaints made by staff toward colleagues were “ignored” by the director and by the council of the ESRI.
“Some people made racist remarks toward their colleagues. Complaints about racism and such racist remarks were ignored by management and even the council of the ESRI. It shouldn’t happen. It wasn’t racism, say white versus black, but it was racist comments directed at colleagues. It is totally unacceptable. Just because it is more common in Ireland doesn’t make it right,” he said.
“With regard to Professor Tol’s comments on xenophobia and racism, similar allegations were made in the recent past by Professor Tol when they were fully investigated and found to be groundless,” an ESRI spokeswoman said.
She said the ESRI had an employment equality policy and a code of business conduct for employees in numerous areas, including racism. These policies are brought to the attention of all members of staff. Complaints are dealt with under the grievance policy and procedure agreed between management and staff.
On his allegation of nepotism, Tol said this related to the hiring of “friends or allies” by powerful people within the organisation, irrespective of their abilities.
“Some of the more powerful people seem to have the right to appoint their friends to positions. It was easy to spot when you looked at the publication records, who the more productive ones are.”
In response, the ESRI said: “There is no basis for his comments on nepotism. All new appointments at the ESRI are made on the basis of public advertisement. The ESRI uses fully open and transparent procedures for appointments and promotion of research staff to ensure that these are made on merit. Interview boards always include an outside expert to ensure the independence and transparency of the process. The recommendations of the interview board must be approved by the ESRI council.”
Opinion within Irish academia about Richard Tol’s departure to the University of Sussex is mixed, with some, like Colm McCarthy of this newspaper and UCD, describing him as a “big loss to ESRI”.
He wrote: “Best of luck Richard”.
Others were less kind. Stephen Kinsella, an economist at the University of Limerick who moderated a discussion on the influential Irisheconomy.ie website, said the opinions expressed were “very polarised.”
“Richard Tol had the ability to be dismissive and condescending of other people’s work, especially in the area of environmental economics,” wrote a contributor named Mr Rudgelift.
“Richard seems to have annoyed some and said some extreme things and I had to delete some of the more personal attacks on him. But from my point of view, I always regret the loss of such a contrarian voice,” added Kinsella.