The road to recovery: different responses


There has been, recently, a plethora of reports on the economy in Ireland ranging from the Government publication 'Building Ireland's Smart Economy' (December 2008), to various analyses by research, social partnership and advocacy bodies, to policy responses by various political parties (e.g. Fine Gael and Sinn Féin). It is hoped, over coming the weeks, to review and compare these recent contributions from the standpoint of four pillars

Fairness and equity (do the proposals effectively address inequality and advance a redistribution of income and opportunities towards the less well-off)?

Public, social and community infrastructure (do the proposals provide an adequate basis for delivering vital social services)?

Sustainable economic growth and competitiveness (do the proposals represent a sensible strategy to position Ireland for the inevitable upswing - eventually)?

Public finances (do the proposals address the need to re-structure taxation and improve the effectiveness of public spending in meeting key economic and social goals)?

Beginning with 'Getting Ireland back to work - Time for Action' published by Sinn Féin in March 2009, I will be looking at other documents in the course of the coming weeks, attempting to identify:

Points of commonality among various 'progressive' platforms

Points of difference among them

Questions and issues that appear to be inadequately addressed across all such contributions

Options for taking particular issues or proposals further

'Getting Ireland back to work - Time for action' is one of the latest contributions arguing - among other things - for a domestic stimulus with a particular focus on public capital spending in key areas of social need, incentives for small, medium sized indigenous industry and an all-island perspective in addressing economic and social challenges. The plan places considerable emphasis on the role of education and training in upskilling those at risk of losing jobs or currently unemployed as well as investment in research and development. Interestingly, the document has relatively little to say about the crisis in banking and finance. It does, however, call for the establishment of a State Bank that would ensure access by small businesses to credit. In this regard it cites the example of the Industrial Credit Corporation (before it was privatised) which proactively sought to avoid company closures and job losses through seeking out firms at risk.

Sinn Féin has very much gone with a Keynesian-style stimulus package. This is all the rage now on the left and in such recent converts such as the new US Administration. The European response, by and large, is sceptical and the Irish Government is listening to too many economists who say 'no point - we are a small open economy - it would dissipate in additional imports with minimal impact on jobs and income here - the problem of public finances is too critical anyway to allow any such largesse'. Sinn Féin disagree on this. They call for sustained and possibly higher levels of capital funding in areas such as schools, housing, ICT (including broadband).

The document also critiques the lack of evaluation of effectiveness in public spending in support of enterprises (page 8). A distinguishing feature of the document is the way in which it places indigenous industry at the centre of any national economic revival. While it accepts the benefits of Foreign Direct Investment (the records do not show that Sinn Féin urged any raising of the nominal 12.5% Corporate Tax rate during their 2007 election campaign), it invokes the Telesis Report of 1982 in arguing for the establishment of strong indigenous (and presumably multi-national) industries.

As further posts will show most of the ideas advanced by Sinn Féin are held by other progressive voices. Some specific policies appear to be unique such as the creation of a State Bank with a specific focus on aiding small and medium-sized businesses. In all the document, provides a valuable set of ideas and proposals which, if acted on, could position Ireland well to avoid the worse excesses of slash-and-burn economics during these trying times and at the same time anticipate how the island could compete on the basis of knowledge, innovation and skills in the next phase of our economic development. If Whitaker and Lemass got it right on the need to open the country to trade as well as foreign direct investment in the 1960s, then a new paradigm is called for as we head into the next decade. Citing Finbarr Bradley and James Kennelly 'Capitalising on culture, competing on difference' the document calls for a 'radical rethink of higher education' and a move away from an 'industrial mindset' to a situation where graduates are flexible, self-starting and multi-skilled.

One suspects that a key to recovery is not just 'more education' but a very different kind of education. Interestingly, Sinn Féin also make the case for investment in early childhood education (we have not heard too much about that in recent times) to 'train workers now for a pre-school education system' and to 'start constructing the buildings required' (page 16). Perhaps the €2 billion earmarked for the building of public offices under 'de-centralisation' could be used for that? It pays dividends, as economist James Heckman points out.

In a telling sentence on page 5, the document says: "Initiatives like the 'Ideas Campaign' website are to be lauded, and show the tenacity, creativity and resourcefulness of the Irish people when put to the test - but we need government leadership, as well as people-led ideas"

Posted in: Banking and financeFiscal policyEconomicsPoliticsFiscal policy

Tagged with: stimulusbankingrecoverySinn Féinindigenousindustry



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