EDUCATION PROFILE: DR ALAN AHEARNE:He gave up a high-flying job in the US federal reserve to move back to Ireland and spared no time in giving us all a reality check. There will be no soft landing for the economy, he told us. At least it looks like the global financial ill winds may blow this ambitious economist good, writes Gráinne Faller
LAST YEAR NUI Galway lecturer Dr Alan Ahearne, along with some of his contemporaries, was roundly criticised by then taoiseach Bertie Ahern for daring to suggest that whenever a downturn hit this country, the oft-predicted "soft landing" might not, in fact, materialise.
This September, Ahearne addressed the annual Fianna Fáil think tank and presented a few home truths to those who might still have doubted his take on what is in store for us over the next few years.
The day of the naysayer had finally come.
Ahearne is everywhere these days. More academically acceptable than David McWilliams, but with the same flair for communicating a tricky piece of economic theory, he has emerged as king of the "I told you so" economists.
It was a different story back in April of last year when Ahearne first burst onto the mainstream radar. He had been contributing regularly to media outlets since 2005, but it wasn't until his doom-laden predictions on RTÉ's Future Shock: Property Crash programme that people really sat up and took notice. Back then, everyone was saying that while growth would slow, a soft landing was in store for the Irish economy.
Ahearne's main point was simple. He had studied 30 or 40 property booms and had yet to find evidence of a single soft landing among them.
His was one of a number of voices on the subject, but the outcry that followed the programme was remarkable. Complaints were made to the Broadcasting Commission. Even Bertie Ahern joined in the hysteria, condemning the programme as "inaccurate" and "irresponsible" and claiming he "disagreed with almost everything in it". Ahearne, along with his fellow analysts, was accused of talking down the economy, and chastised for ruining our collective buzz.
He stuck to his guns however, maintaining in the media that things were going to fall apart. He was even brave enough to put a time-line on it when at the beginning of 2007, in an interview before the Future Shock programme, he said that we would see a downturn within three years. He was right of course and now, even the politicians are paying attention.
An invitation to address Fianna Fáil during their annual think tank in Galway last September raised eyebrows. "Everyone was amazed," one fellow economist recalls. "Most of the time, the people who address these things are chosen for their willingness to tell the politicians what they want to hear." Ahearne certainly wasn't going to do that and he pulled no punches with a speech that disagreed with those who predicted a recovery by 2010. The slump would be severe and we would have to wait until 2011 before any real recovery, he predicted.
He warned that making the correct policy decisions was crucial to our recovery and counselled against Government interference in the faltering property market, such as providing subsidies for first-time buyers. The politicians listened and emerged shell-shocked from the conference room.
"[Brian] Cowen and [Brian] Lenihan realised that things were going downhill and that tough measures needed to be taken," a contemporary said. "I have no doubt but that Ahearne was used to convey that message. He was chosen to give the backbenchers the reality check they needed."
Ahearne brings a wide range of expertise to his commentary. He distinguishes himself from the rent-a-mouth crowd in that it is always solidly evidence-based. Never one for presenting personal opinions as analysis, his main areas of interest are macroeconomics and international finance and his research includes studies of property markets in Ireland, among other things.
As well as his lecturing post in Galway, he holds a prestigious position as research fellow at Bruegel, an esteemed European think tank devoted to international economics. With a rich and varied background, there is some speculation about what turn his career will take next.
From Limerick, Ahearne, now 41, distinguished himself as a student of business in the University of Limerick and gained a master's degree in economics from UCD. A two-year stint as a lecturer in NUI Galway was followed by a PhD in the prestigious Carnegie Mellon University in Pittsburgh. Ahearne's PhD supervisor was Fynn Kydland, a renowned economist who subsequently won a Nobel Prize in 2004.
Despite winning accolades for his teaching at Carnegie Mellon, Ahearne chose not to follow the academic route after finishing his PhD and instead took a job with the Federal Reserve Board in Washington in 1998.
Throughout his seven years there, he was the principal economist at the board covering the Japanese and Chinese economies. He regularly briefed chairman Alan Greenspan and other board members on these matters and was promoted to senior economist in 2003.
"He had to think about issues at a policy level," one contemporary said. "And he had to brief non-economists all the time. I think it really stands to him now when he has to communicate in the media." Although his career was going well in the US, he and his wife decided to move back to Ireland with their children in 2005. A number of different universities had been following his career, but his decision to take a post in NUI Galway surprised some who thought a job in Dublin might have presented more opportunities.
Others disagree with this viewpoint. "Nobody moves from the Fed to Ireland for the sake of their career. That's always going to be a decision you take for personal reasons," a former colleague said.
Ahearne had an eye on the media and commentary circuit from the very start. He began to contribute to radio programmes right from the beginning of term in 2005. "He was definitely a man in a hurry to build a big profile for himself," said one contemporary.
The public turn his career has taken back in Ireland has surprised many who knew him before that. "He's actually quite an understated person. Reserved, I suppose you'd call it," one former colleague commented. "I just wouldn't have thought that he was the kind of guy to go for high-profile stuff. I didn't think that publicity and cultivating media contacts would be his thing."
Some believe this preference for commentary over publishing in academic journals has hindered his career in Ireland. "He was in the running for a professorship in Galway," a peer said. "But I don't think he had published enough to get it . . . I think some of his contemporaries have reached that level already."
Others speculate, however, that Ahearne's choice of commentary before academia is part of a deliberate strategy. "I think he has his eye on more lucrative possibilities than those the academic sector can offer," one peer said. Indeed, Brian Lenihan consulted with him prior to the Budget and some believe a Government advisory role could be in the offing at some point.
Even his harshest critics concede that his material is always rock solid. "He is very well qualified as a commentator and analyst of Irish issues," said one colleague. "He speaks as a mainstream economist and he doesn't cultivate drama for the sake of it."
Ahearne writes a regular column in the Sunday Independent and has written for both national and international publications. For now, at least, his star shows no sign of waning.
"Ahearne's not afraid to take on the vested interests," one fellow economist said. "He has the huge advantage of being independent. He's just prepared to come out and call it as it is. That's a valuable thing in the media. I have to say that when it comes to analysis, I'd listen to Alan Ahearne quicker than I'd listen to anyone else."
The word on the web
• David McWilliams was pilloried for daring to suggest things might go south about 18 months ago, as was Alan Ahearne, Prof of Economics in NUIG (and former Fed economist). Now look what is happening with housing, unemployment, and most insidiously of all inflation.
Politics.ie
• Alan Ahearne was on Newstalk talking about how people talking up the market recovery being just around the corner are basically talking out of their backsides.
Politics.ie
• Out of curiosity, those economists like David McWilliams, Alan Ahearne and Morgan Kelly who foresaw in 2006 and 2007 that the house crash was coming, what did they advise as alternatives for people to put their money in? Just wondering how anyone who took their advice would now be faring? Propertypin.com
• Besides, David McWilliams, Alan Ahearne, Morgan Kelly and others, including the Central Bank of Ireland, the IMF, the Economist magazine did warn about this. They were dismissed as begrudgers then and now they are dismissed as stopped clocks. Who wants to be told that they have just wasted all their equity or locked themselves into an investment apartment that may pay its way in 10 years if they throw enough money at it in the meantime?
Askaboutmoney.com
• I had hope when I heard that Alan Ahearne was addressing Fianna Fáil's "think-in" this year. Maybe they might actually do the right thing this time, I thought. Maybe. But the Galway races still beats the Galway economist for Fianna Fáil
Propertypin.com
