PAUL MCCULLEY brings a cool, Californian vibe to the Set Theatre in Kilkenny. He is 55, wealthy and retired from managing tens of billions of other people’s money for bond king Pimco. Economist Paul Krugman regards him as one of the finest economic brains in America.
A full house beholds the head of bouncy, lustrous, shoulder-length grey hair (the kind that takes serious maintenance) and tasselled snakeskin loafers and wonders in its sad, penny-pinching shame, how it must feel to be McCulley.
He knows what they’re thinking: “You are rich when you quit looking at the right-hand side of the menus.”
Still, he once baulked at paying $14 for a room service pot of coffee, he says, ergo he is “not yet rich”.
“Yeah, right,” sighs a voice a few rows back.
McCulley is the brilliant, quirky, often contradictory essence of Kilkenomics, David McWilliams’s annual, seriously entertaining economics fest. So this retired capitalist, money safely stashed, is here to tell us that there are limits to greed; that it’s time to apply the 12-step programme to private sector debt (Step 4: thorough and fearless self-examination); that democracy and capitalism are in “an unholy marriage of incompatibility”; that capitalism in Ireland is dead and Irish democracy a widow – “and now you have your ex-partner’s mother living in your cellar”. Her name is Creditor.
It’s a tour de force.
Prowling back and forth, stroking his beard and flicking his fabulous hair, declaiming like a southern Baptist preacher, he says democracy is inherently a socialist system, while there is nothing egalitarian about capitalism. “But the tie that binds them is called the rule of law. While capitalists curse and bemoan government and politics, the one thing they have to have is an enforceable, credible rule of law.”
What capitalism brings is efficiency – too much of it in the past 20 to 30 years, he reckons.
Democracy
In the US now, election decisions are being taken about the balance between democracy and efficiency. “It’s a matter of degree, which is why I’m reasonably optimistic about America”. But in Euroland there is a third dimension: national sovereignty.
“What’s going on here is whether sovereign states are willing to sacrifice their democratic sovereignty on the throne of capitalism. Does the creditor set the terms? That’s called austerity and punishment: capitalism.”
Allow that and the price will be one of “enduring anaemia, pneumonia. . . an enduring second-class citizenship wearing the cloak of shame. And the young will vote with their feet.”
His prescription? Simple. It’s all in Paul Simon’s 50 Ways to Leave Your Lover, he says.
“It is [the markets] who will come back to you! Get yourself free,” he booms. “But I don’t think this country has the testicular fortitude to sing Paul Simon.”
Under questioning, he concedes that Simon’s might be an extreme route to take. “We need a marriage counsellor here . . . What is untenable is trying to form a new relationship when the elephant of the too-big-to-fail debt is sitting in the bedroom.”
Keynes wrote all this in 1919, he says. You can’t get blood from a stone.
The most flamboyant defaulter of the 20th century was Germany, concludes McWilliams, winding it up in every sense with a mischievous grin.
If that wasn’t enough to fire up testicular fortitude, there were 25 other events with 30 contributors from across the world, many of them rather bemused that the euro was still staggering on.
The €3.1 billion promissory note due for payment in March was a standing target. Prof Karl Whelan said paying it was the same as burning €3.1 billion in front of the Central Bank. He suggested we offer to pay €1 a year for 3.1 billion years.
Fintan O’Toole said the country should shut down on March 31st, rather than allow it to be paid. “If you want to make the first step, Fintan, I will walk with you,” responded Constantin Gurdgiev – his ideological opposite – to a delighted audience.
Another session asked: Are we addicted to bad news? “We are,” said American broadcaster Max Keiser, because “fear is a lot more evocative and human than faith . . . The economics of fear are hugely profitable for a stockbroker. You scare clients into selling stock quickly and you make a lot of money . . .
“Lehman Brothers actually crashed as a result of a rumour and billions were made in negative bets. So we’re living with the fear model of economics.”
Gamblers
What of the shark pool that threw up these gamblers? It was addressed in a roundabout way in a session entitled The Feminine Touch: Does ‘Maleness’ cause Financial and Economic Mistakes?
Four women – the only ones among the weekend’s 30 contributors, none of them Irish-born – politely clapped each other on to the stage (unlike the men) and the all-female panel decided that greater female involvement probably wouldn’t have made much of a difference in the crash. Well, maybe . . .
Euro zone economist Megan Greene said she once worked with an all-female team that was every bit as “terrifying” as any male counterpart. Yet, she said later, “Generally women don’t take as many risks but in the longer term they’re better at getting what they want on the bottom line. That could make some difference in a crisis.”
So why aren’t there more women in the industry? Linda Yueh, Bloomberg TV’s economics editor and board member of a FTSE company among many serious academic hats, felt the issue was more about age than gender. “Why do professors tend to be male? Is it a pipeline issue or discrimination?”
Margaret E Ward, who runs Clear Ink communications, reckoned it was a cultural problem. She talked about the need to get more women on the airwaves. Ward said she had produced a list of 14 female economists for one producer and not one had got a call. “Women are terrible at putting themselves forward,” said Greene.
Greek-born, Oxford- and LSE-educated journalist Matina Stevis – whose lucky break was all about timing – said she found the idea of female databases “really patronising”.
But Yueh got back to an old theme, what she called the value of weak ties. “Women will value relationships with people they like. Men will drink with anyone.” Only towards the end did these powerful women admit they still had personal battles to fight. Yueh is regularly asked: “How’s the internship going?” Stevis takes grave exception to men who flirt with her “and think it’s okay to imply things that immediately put them in a higher power position than you”. It took a man to point out that the European Central Bank has no women on the board.
