Pru­dence loses out as politi­cians please the peo­ple

The Irish Times - - Opinion & Analysis - Pat Leahy

The as­sault by the Fis­cal Ad­vi­sory Coun­cil on the Gov­ern­ment’s man­age­ment of the na­tional fi­nances is a se­vere blow to the Coali­tion’s eco­nomic cred­i­bil­ity, which un­der­mines its po­lit­i­cal strat­egy to pro­mote it­self as the guardian of bud­getary pru­dence.

It comes at a time when the Gov­ern­ment is re­al­is­ing that it will face po­lit­i­cally bruis­ing bat­tles next year on pub­lic sec­tor pay with teach­ers, nurses and other pub­lic ser­vants. Min­is­ters will be faced with the choice of col­laps­ing their own creak­ing pub­lic pay (and there­fore bud­getary) pol­icy or hang­ing tough against a well or­gan­ised and very me­dia-friendly pub­lic sec­tor lobby.

Some of the more far­sighted peo­ple in Gov­ern­ment re­alise this, and they be­lieve that Fine Gael has to re­gain the ground of fis­cal re­spon­si­bil­ity be­fore an elec­tion. They have doubts, how­ever, about the ca­pac­ity of this Gov­ern­ment to man­age that.

The re­port of the Fis­cal Ad­vi­sory Coun­cil was a dense and well con­structed eco­nomic ar­gu­ment. The pre­sen­ta­tion by its chair­man, UCC eco­nomics pro­fes­sor Séa­mus Cof­fey, at the bud­getary scru­tiny com­mit­tee this week was more ac­ces­si­ble to the non-pointy heads among us. It was all the more dev­as­tat­ing for that.

The re­sponse of Gov­ern­ment has been to say, well, which of the ad­di­tional in­vest­ments in health and wel­fare and ed­u­ca­tion shouldn’t go ahead, then?

And the Taoiseach is hardly wrong that there are press­ing so­cial needs – such as hous­ing – which many peo­ple want the Gov­ern­ment to meet. And that costs money.

But balanc­ing those needs, and pri­ori­tis­ing where to spend money and when, isn’t Prof Cof­fey’s job. It’s the Gov­ern­ment’s. Prof Cof­fey’s job is to ex­am­ine the macro-bud­getary ap­proach and pro­nounce on its pru­dence, wis­dom and sus­tain­abil­ity Al­right, say some Gov­ern­ment fig­ures pri­vately.

But Prof Fancy Pants doesn’t have to get elected. He doesn’t have to knock on doors in Don­ny­car­ney or Tuam or Bo­her­la­han and jus­tify his de­ci­sions, where the au­di­ence is less in­ter­ested in macro-eco­nomic sta­bil­ity than it is in the win­ter fuel al­lowance or the USC or the fact that the lo­cal school is housed in pre­fabs.

Po­lit­i­cal mar­ket

And this is true. In fact, it is a dev­as­tat­ing truth about democ­racy: the po­lit­i­cal mar­ket for good gov­ern­ment – which dis­ci­plines it­self, looks to the long term and meets cur­rent needs sus­tain­ably – is at best deeply un­cer­tain.

Ire­land is not unique in this. But hav­ing ex­pe­ri­enced three pro­found eco­nomic crises in the last 40-odd years, we are clearly more than rou­tinely sus­cep­ti­ble to a form of eco­nomic mis­man­age­ment that ex­pands pub­lic spend­ing in re­sponse to po­lit­i­cal de­mands, and then has to sub­se­quently re­duce spend­ing in a painful and so­cially dam­ag­ing way.

Why does this hap­pen? Partly, I think, it’s be­cause politi­cians are so des­per­ate to please peo­ple.

The Ir­ish po­lit­i­cal sys­tem has many faults, but re­mote­ness from vot­ers is not one of them. The ac­cu­sa­tions about po­lit­i­cal elites be­ing re­moved from the con­cerns of or­di­nary peo­ple is one that may be lev­elled in many poli­ties (in both the poor­est ones and the rich­est ones) but it’s a non­sen­si­cal one in Ire­land, de­spite its fre­quent air­ings.

Any Ir­ish politi­cian who be­came cut off from the con­cerns of or­di­nary vot­ers would end up los­ing his or her seat. Ir­ish vot­ers de­mand prox­im­ity, fa­mil­iar­ity and re­spon­sive­ness from their politi­cians. The ones who don’t keep in touch don’t keep their seats.

This is not an ab­stract ob­ser­va­tion. It goes to the heart of the de­bate over bud­getary pol­icy. It is one of the cen­tral problems in how we do pol­i­tics and how we talk about it.

How many times have you heard a politi­cian ber­ated on ra­dio for fail­ing to meet so­cial needs in health, hous­ing or ed­u­ca­tion? How many times have you heard the same pre­sen­ters be­rate the same politi­cians for their fail­ure to man­age the pub­lic fi­nances sen­si­bly?

Re­mem­ber 2007. Af­ter a decade and more of spec­tac­u­lar, un­in­ter­rupted pros­per­ity, the gen­eral elec­tion in­flated into a mas­sive bid­ding war, with Fine Gael and Labour more than will­ing to match Fianna Fáil’s prom­ises. This is where the pol­i­tics of scram­bling to give vot­ers what­ever they want, no mat­ter the cost, leads. Here’s an ex­cerpt from Ber­tie Ah­ern’s pre-elec­tion ardfheis speech:

“From next month a fam­ily with two chil­dren un­der 6 will get a di­rect and un­taxed pay­ment of ¤5,840 a year.

“We will re­cruit 4.000 more pri­mary school teach­ers.

“We will pro­vide 2,000 ex­tra gar­daí. “We will cut the stan­dard rate of tax from 20 per cent to 18 per cent.

“We will cut in top rate from 41 per cent to 40 per cent.

“We will in­dex tax cred­its in line with pay in­creases.

“We will dou­ble the home carer tax credit.

“We will halve PRSI.

“We will In­crease the old age pen­sion from ¤200 a week to ¤300 a week.

“We will in­tro­duce a free health check for all.

Comedic touch

“We will pro­vide 1,500 ex­tra hos­pi­tal beds and dou­ble the num­ber of con­sul­tants. “We will join the Luas lines.

“We will build metro west, metro north to Dublin Air­port and the west­ern rail cor­ri­dor.”

In a comedic touch that was pre­sum­ably un­in­tended, Ah­ern also as­serted: “Ir­ish pros­per­ity be­gins with re­spon­si­ble gov­ern­ment.”

As you may re­call, this ap­proach was en­tirely suc­cess­ful as Fianna Fáil re­turned with an in­creased share of the vote. As you may also re­call, things did not ex­actly end well for any of us.

There is a dan­ger now of a re­turn to this kind of pol­i­tics. The fis­cal coun­cil’s re­port may have been os­ten­si­bly about eco­nomics, but re­ally it’s about pol­i­tics.

Ul­ti­mately politi­cians will give vot­ers what they de­mand, whether that is wise or not.

This does not ab­solve Paschal Dono­hoe of his re­spon­si­bil­ity to be Pru­dent Paschal. But it sug­gests that it’s not his job alone.

Po­lit­i­cal tim­o­rous­ness is only one part of this.

Pub­lic my­opia and our some­times self-de­struc­tive po­lit­i­cal cul­ture are part of the story too.

Ir­ish vot­ers de­mand prox­im­ity, fa­mil­iar­ity and re­spon­sive­ness from their politi­cians. The ones who don’t keep in touch don’t keep their seats

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