Getting ideological

Paula Clancy20/03/2009

Paula Clancy: David Quinn is right about one thing: we do need to start asking ourselves what kind of society we want when we come out of the current crisis. I think most of the allegations in his column last Friday are unfounded, but any call for a real debate on the choices facing us must be supported wholeheartedly.

David seeks to blame the Left, in Ireland and internationally, for leading us into the current crisis; to absolve the “free market” of responsibility for the financial system’s destruction; and to transfer the blame instead onto out-of-control public spending.

For the last 15 years or more, economic commentary in Ireland has been dominated by economists promoting the line that inequality is good; public is bad; and, if the market and competition is allowed to do its thing, most of us will be rich. Most of these economists were rewarded handsomely for their pains. Those who were not directly employed by the banks and stockbrokers frequently had secure university posts which allowed time for consultancy services with regular access to industry, finance, government and the news media. Meanwhile, progressives who did warn about the flaws, inequalities and missed opportunities of the Tiger model were sneered at as jonahs, or dismissed as old-fashioned begrudgers, or both.

The attempt to absolve the “free market” and its fundamentalist ideologues of responsibility is more flimsy still. It is perverse to blame regulators – public servants, albeit overpaid – for the failure of a system which we were told was best with virtually no regulation, instead of blaming those running our financial services institutions who pocketed tens of millions of dollars in annual salaries while making what they now admit to be ‘poor decisions’. Last week, in response to an article which similarly blamed the regulators, one correspondent from a financial services firm wrote in the Financial Times “Excuse me, but, in the Anglo Saxon world, we were lectured incessantly – and arrogantly lectured others – that markets worked best when free of government intervention and with minimum regulation”. That says it all.

Out-of-control public spending is the other named culprit. Recent history tells a different story. Former President Clinton balanced the budget before he left office, but did so largely by slashing programmes for the poor. Of course, the second President Bush subsequently ballooned the deficit through massive tax cuts for the super rich and the illegal war in Iraq. The OECD, which has impeccable “free-market” credentials, said that Ireland's “public spending and employment growth has not kept up with population and GDP growth. Government policy has decreased the number of public employees as a % of the labour force and the overall public sector wage bill as a % of GDP. Compared with other OECD countries, government employment in Ireland is relatively low.” And, despite the scaremongering, Ireland’s national debt is not out of control. In fact, on current government projections, it will be only slightly higher than 60% in 2010, compared to more than 75% for the Eurozone as a whole.

It is not that progressives are fixated on a “big state” or “high taxes” per se. We do believe that the pursuit of equality is a sound principle for a successful society and ought to be a primary objective of public policy. Quality public services, universally available, are the single biggest contributor to such a society. For obvious reasons, we have as great, or indeed greater, interest than right-wing ideologues in ensuring that these are efficient, well-delivered and popular. It is, however, a fact that no country in the world has achieved the level of equality and public wellbeing that we should aspire to, with public spending as low as ours.

Our focus on equality is not just a product of the politics of envy. Reducing inequality is good for everybody, not just the worse off. Just read The Spirit Level by Wilkinson and Pickett for proof, across a whole range of measures, that people live longer, healthier and more fulfilling lives the lower the level of inequality in that country, city or community, regardless of wealth or per capita income. Inequality is simply bad for us all.

But there are some grounds for optimism. The election of Barack Obama might just signal the end of a dark age where growth and greed were the gods, and society was just a dump for the little people. Here in Ireland we did not escape the infection of the Reagan/Thatcher virus, so perhaps the slow wake of the PDs signals our recovery moment. The world which follows the current depression will be radically different, and we must recognize that we do not have the planetary resources to accommodate never-ending rampant growth, consumption and greed. We will have to work out an economic and social model which is more collaborative and can generate a better return in terms of individuals’ wellbeing than the consumption and ever-higher GNP model has managed.

Posted in: EconomicsFiscal policyEconomicsPoliticsFiscal policy

Tagged with: public spendingceltictigerPolitical Economygrowthregulation

Dr Paula Clancy

Clancy, Paula

Dr Paula Clancy was founding director of TASC. She served in that position from 2001 to 2010 and returned to it for a brief period from 2014 to 2015. She is a member of the Board of TASC and is Chair of the TASC Research and Policy Committee. Prior to 2001, Paula held senior academic and management posts in third level education. Paula is author/co-author of a range of major research projects in the fields of political analysis and democratic accountability. She has authored a number of articles on the consequences of austerity in Ireland since the crisis.


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