Monday, 27 July 2009

Dublin Consensus backed by Garret

Slí Eile: The Dublin Consensus is solid. Garret the Good has added his voice to the Consensus in his most recent Saturday column. He writes:
It is now crucially important that the Government secure sufficient Dáil support in the December budget to deliver on its 2010/2011 commitment to reduce current and capital spending by €3 billion and €1.75 billion respectively, as well as to raise tax revenue by €4.6 billion. Failure to secure this support would gravely damage our financial credibility.
He also goes on to support - reluctantly - some reductions in social welfare:
While I am certainly not happy about that proposal, the alternative of up to €2 billion in cuts in the total cost of health and education means that I cannot rationally reject the need to take some action in relation to social welfare.
Again, it is part of the old Dublin Consensus line that 'There Is No Alternative'. It's a zero sum game: if you don't agree to slash A you are, effectively, supporting a slashing of B and/or C. The 'markets' have already ruled out any discretion on borrowing and any increases in taxes must be moderated (even though we continue to tax the very wealthy very lightly).
In the same edition, Noel Whelan ('Lee's economic solutions look unrealistic') suggests a type of clock:
...a “national debt clock” should be erected in Dublin city centre as a means of focusing minds on how rapidly our national debt is rising....
Like 'Today we are borrowing €70 million' as the digits keep rising.
Something similar has been suggested by Swedish economist Jens Henricksson.

Yet again, we are served a diet of mild hysteria and tilted ideology. Taking a figure of €50m per day (dividing €18bn net borrowing by 365 days) - approximately €25m of that goes for capital spending. The remaining €25m arises largely from cyclical factors associated with the surge in payments of unemployment benefit. These may be viewed as partial stabilisers.

We don't hear a prominent chorus for a 'national unemployment clock' on our thoroughfares. Neither do we hear calls for a 'tax relief clock' showing an estimate of how much Government is losing in taxes on subsidised private health, pensions for super-earners etc.

Political and union forces on the left need to stand up to this.


Anonymous said...

Eh, what is the basis of Garret's credibility as a commentator? Given his, being polite, less than successful running of the Irish economy during the 1980s, why should anyone take what he says now seriously?

But on the debt question: have any exponents of the "Dublin Consensus" explained how much of the current borrowings are going in one door and straight out the other door: direct to the banks?

Michael Taft said...

Yes,we could erect an ‘unemployment clock’. The ‘hour’ digits could measure the full-time job losses, the ‘minute’ digits could track the short-time and under-employed (forcibly part-timed) and the ‘second’ digits could quantify those who have dropped out of the labour force, either by staying home or leaving the country.

Or we could erect a ‘bank bail-out’ clock. Though, with NAMA on the verge of being animated, the digits would increase so fact it would just be a blur to passerbys.

Finally, we could erect a clock that counts the number of words written or spoken by ‘informed commentators’ who, first, told us that cutting taxes and ‘getting the state off our backs’ was a very good thing; and now tell us that cutting spending and ‘getting the state off our backs’ is a very good thing. The only problem is that no one has built a clock that can count that high.