This is why we can’t have nice things…

This is a version of a column in the Irish Examiner Saturday 30 may.
This is why we cant have nice things.  We cod ourselves that we can, but we neither raise enough money to pay for them nor do we make them work when we get them.


As I write, Wednesday evening, we are still not finished with the election of a mere 11 MEP’s, having voted last Friday. It is starkly incomprehensible that in a country with hundreds of thousands of persons unemployed we cannot find enough warm, literate bodies to the task of taking pieces of paper, seeing what is written on them and moving them to a particular pile. India, with a considerably larger population, managed to get their count finished four days after the polls closed. The shambolic, yerrah shure itll do attitude to what is the cornerstone of our system, representative democracy, tells us a lot.

We seem as a nation incapable of economically efficient organization of our activities. The election showed this, and not just the counting.

First, consider the slow resurgence of Fianna Fail. Having flung the country over the precipice we have as a nation decided to punish those that are sweeping up the shattered remains of the state while rewarding those who flung. There are great people in FF, at all levels. The fact yet remains that in every generation they manage through gombeen populism to induce an economic calamity. And we love them for it, it seems. Populist promises of perpetual prosperity yield political power.

We saw Sinn Fein benefiting from the general sense of tiredness regarding economic restructuring, and while not quite promising a chicken in every pot they have clearly read the FF playbook and realised that extravagant populist promises can be made, and so long as some of them are carried through they will be rewarded.  Combined with Labour’s efforts to channel the destructive impulses of the Gormley era greens, and FG’s realisation that austerity alone is not a policy, the stage is set.  The auction of the state at the next election will make the 1977 FF election manifesto seem a model of fiscal prudence. As a people we place no premium on honest political manifestos.

All this is set against the fact that STILL, after 6 years of budget adjustment, we run a deficit. This deficit is the worst kind, being composed in the main not of a structural but of a debt nature. We are, more or less, now paying our way as a state in terms of income and expenditure net of interest on the national debt. Even a large chunk of that is being paid. We are in balance but for the enormous legacy of debt which was gifted to us from the banking sector. It would be nice to think that we could run a deficit to start to remedy the demand deficiencies in the economy but we cannot. Fianna Fail started and the FG/Lab government cemented the policy of converting private debt to public. And we have not learned to punish all equally who collaborated in that. Remember, SF voted FOR the bank guarantee folks… That is one reason why we cant have nice things. We frittered the money away.

A second reasons is that we are unwilling to pay for them. We are running up to an auction. In the runup one meme will be reinforced – that we are groaning under the weight of usurious taxation, uniquely burdened amongst the nations and this must be relieved. Every party in Ireland is a Tea party – some are Barrys, some Lyons, some Robert Roberts, some Capital, some Own Brand. All are tax cutters to make the Teapublicans in the USA weep with joy. And its bunk. Our tax issues are not in the burden – they lie in the way we levy them. We are unable or unwilling to structure a taxation system that is fit and proper for a modern society. Tax as a % of GDP in 2011, the last year for which comparable data is available across the OECD, , is now 10% below what it was in 2000. At 28% it is a full 6% below the average OECD country.  Even that we insist on not using GDP but use GNP shows we are unwilling to organize our economy in a modern fashion. We are MNC junkies, more akin to Costa Rica than a modern European economy. Tax on the average worker in 2012 in Ireland was 26%, again well below the OECD average of 35%. Our tax issue lies most starkly out of line with social contributions – PRSI and USC. We collect only 40% of the EU average in total in these charges. Employees here pay 33% the social insurance charges of the EU average, employers 47% and the self employed 13%. Coupled with   indirect tax take of only 85% the EU average this reduces total tax. But is any party going to come out and say “up PRSI and USC”?  We will continue to cod ourselves and to engage in piecemeal reforms.  We do this in tax all the time – a nod to a special interest here, to a  lobby there. We do it in health all the time – layers of complexity overlaid with inefficiency stewed in a bureaucratic mire which comes only to the boil when political heat is applied. We are doing it in relation to the installation of water meters, postcodes, school patronage, across the gamut of the state. We want berlin levels of public services with boston levels of tax but with Burundian levels of government effectiveness. We can do better. But to do so we must start demanding and then rewarding political honesty. And political honesty

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3 thoughts on “This is why we can’t have nice things…

  1. FERGUS O'ROURKE

    Well said.

    You do not make it clear, and I do not have the data to hand myself, but I am pretty sure that the truth is that

    1. Even if a scrupulous assessment of where the blame lay for the banking collapse magically found that none of it was properly the responsibility of the Irish state; and

    2. Even if that finding magically led to all the bank-related debt suddenly disappearing

    the Irish state would still not be covering its costs, much less repaying its debts.

    Reply
  2. JohnB

    There are still ways we can tackle demand deficiencies, such as alternative funding proposals like Tax Anticipation Notes (n.b. it is a complicated idea – just about all immediate problems that can be thought of with it, are already solved, if you think on it a bit further – the comments deal with almost all of them).

    They are like a mix between an alternative currency, and bonds/public-debt – except we’d be legally capable of pursuing it, and there is zero interest; they are no panacea, but they would allow a lot of essential breathing room (if the Euro someday fails, they would also greatly limit the length of the damaging transition period, to a local currency).

    I think that there is not nearly enough attention paid to alternative economic policies – I’ve learned of a number of them that we could employ, including e.g. public banking, that could help us a lot, but they seem to get dismissed as novelties, when their potential benefits are very significant/real.

    Reply

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