Trinity Economic Forum draws to a close with clashing opinions by Paddy Cosgrave and Vernon Smith

Speaking exclusively to Trinity News professor Smith praised the strength of the Irish economic “comeback”, although he lamented the practise of bank bailouts and guarantees that took place

NEWSOn Saturday the 2016 Trinity Economic Forum (TEF) drew to a close, after a busy second day of distinguished guest speakers, animated panels and interactive workshops in Trinity’s Long Room Hub.

Among the contributors to the day’s discussions were Nobel prize-winner Vernon Smith, Web Summit co-founder and BESS graduate Paddy Cosgrave, and NTMA Chief Economist Rossa White.

As arguably the most publicised and anticipated speaker of the entire Forum, Nobel laureate professor Vernon Smith delivered the first talk of the day, outlining the work he has done throughout his career in the field of experimental economics. Smith, 89, said that as a pioneer in the field of experimental economics he sought to challenge and change “false beliefs about knowledge and markets” that he witnessed in the first half of the 20th century.

With the use of graphs and research findings, Smith recounted his discovery of market convergence in markets of inexperienced traders to the assembled audience of students and academics.

Through an example of the development of property bubbles, he explained his thesis that the consumption of nondurable goods “is the main source of stability in any economy”.

Speaking exclusively to Trinity News prior to this morning’s presentation, Professor Smith  praised the strength of the Irish economic “comeback”, although he lamented the practise of bank bailouts and guarantees that took place both here and in his native United States.

In terms of the US presidential race, despite the dominance of issues of national security and migration, Smith was confident that economics “will play a role in the rhetoric” in light of a “disappointing recovery” under Obama.

He also expressed his desire to see 0% tax levied on businesses in an effort to boost economic growth: “It’s very important to make it easy to start new firms… Everything that comes into a business is paid out, and when you tax businesses you reduce their ability to grow”. Looking to the future, Smith said that the rise of “young firms that get big fast” makes it “very hard to predict where economics is going to go”.

He suggested economics students seek a “broad and general education” before embarking on a career, because “in twenty years from now, you will be astonished at what you’re doing”.

Drug policy

Continuing on proceedings in the main Neill Hoey Lecture Theatre of the Long Room Hub was Professor Friedrich Schneider, an expert on “shadow economies”, who preceded a panel discussion with a presentation on the economics of illegal drug markets in the European context.

Schneider set the tone for the Irish-centred debate on drug policy that followed him by claiming that “if one would liberalise the drug business, the crimes connected to it would be considerably reduced”. In his concluding remarks, he marvelled at the fact that “in this country, you can legally drink yourself to death with alcohol…but not with drugs”.

In the panel discussion that followed, which comprised of Dr John Collins of the London School of Economics, barrister and advocate for drug policy reform Marcus Keane, and Graham de Barra of the “Help not Harm” organisation, there was a consensus that a public health rather than criminal justice approach to substance abuse was necessary in Ireland.

Collins lamented that often the economic and social argument for liberalising drug policy is “subservient to the political and moral debate”. Mr de Barra cited the statistic that 84% of college students have tried some form of illegal drugs at least once, and that decriminalisation is a step towards adequately informing and educating young people.

There was unanimity among the panellists that not only does criminalisation fail to dissuade consumption, but it marginalises addicts from vital services and may result in greater drug-related deaths.

Returning to the theme of Ireland’s recession and subsequent recovery, Rossa White of the NTMA spoke on the challenges the Irish economy faces in seeking to prolong the current trend towards prosperity. He stressed the need for “smaller, safer banks”, “structural balance” and “macro-credential rules” in preventing the development of another property bubble.

Despite noting that it is “much easier to avoid getting into a mess than get out of one”, White lauded Ireland’s “five straight years of fiscal outperformance”, and the fact that fertility trends have resulted in Ireland having “probably the best demographic structures in Europe”. Although he sounded a cautionary note about over-valuations within the pharmaceuticals and IT sectors, overall White presented a rosy economic outlook for the next few years.

A series of smaller group workshops centring on the 1916 Rising, health economics and financial trading took place after lunch, and further talks were delivered by behavioural economist Peter Lunn, and trade unionist Brian Campfield.

Paddy Cosgrave

TEF 2016 was brought to a close by TCD alumnus and tech entrepreneur Paddy Cosgrave, who began his address by recounting the lunch he had just had with eight Trinity students whom he credited for inspiring much of the subject matter of his talk.

Cosgrave spent much of his thirty minute speech meditating on the nature and history of economics as a discipline, and audience members were reminded of the remarks made by David McWilliams the previous evening, when Cosgrave expressed disillusionment with the fundamentals of economics imparted at undergraduate level.

In stark contrast to the views expressed by Vernon Smith earlier in the day, Cosgrave heavily criticised the “inequity” of Ireland’s corporate tax system, branding it a “system that allows for the radical upward distribution of wealth”. He questioned why there are more portacabins in Irish primary schools in 2016 than in the 1980s, while the country enjoys high amounts of foreign direct investment.

Cosgrave went on to highlight that “Ireland has the highest rate of overeducation in the OECD”, a fact that is not matched by “abysmal” industrial policies that fail to generate “the types of jobs really smart people would go into”.

In what may be interpreted as a covert allusion to the decision to relocate the Web Summit to Lisbon from 2016, Cosgrave stated that young Irish make a “rational decision” to emigrate when “the skills that you have are completely undervalued” in their home economy.

As a final word, Cosgrave encouraged the audience to branch out and explore new disciplines, for while “accountants and lawyers are measured on their ability to master existing knowledge…the engineers and innovators are measured by their ability to create new knowledge”.

Speaking to TN at the Forum, Professor Friedrich Schneider praised the student-run nature of TEF, its professional organisation and the well-curated programme. At the close of the day, TEF co-ordinator Catherine Corrigan reflected that “being able to attract back Trinity alumni who can understand the value of doing something like [TEF], outside of what the classroom is teaching us, stands testament to what we’re doing.”

She also reiterated her thanks to Vernon Smith, who stayed for the conference and “hung around all day to talk to the students”. Looking ahead, the committee is hoping to attract major government figures, and perhaps another Nobel Laureate to TEF 2017.