Report is expression of a paradox

David Jacobson17/07/2009

David Jacobson: Rather than discuss the details of the report, I’d like to make four more general points about the situation.

First, the report itself is an expression of a ridiculous paradox. In the context of a crisis arising from the fact that markets did not work and were inadequately regulated by the state, the job of recommending cuts has been given to a neoclassical economist. Like others of his ilk, he believes in markets and this underlies his proposals. Surely a strategy for the way forward should focus on radical new ways of generating output in the economy in such a way as to support the people who live in this country.

Second, the McCarthy report provides a huge range of possible cuts. The selection of which ones are to be implemented will be done politically. This again calls for political economy in the analysis of the report.

Third, given the short-termism of political perspectives – with a time horizon of about as long as the period between elections! – the cuts selected will be those resisted by the weak. Arguably politicians are influenced by their key supporters, the powerful and the rich. To the extent that this is so, the cuts implemented will be those in the interests of the powerful and the rich.

Fourth, consideration of the report will have to be balanced with the forthcoming report of the Commission on Taxation. In the end the choice of what to do will have to balance an increase in taxation with a reduction in government expenditure.

Posted in: Economics

Tagged with: Bord Snip Nua

Professor David Jacobson     @davidjacobson48

David Jacobson

David Jacobson is Emeritus Professor of Economics at Dublin City University Business School. He is the Chair of Commission on Industrial Policy in TASC since 2011. He has written and lectured on various aspects of industrial policy and political economy in Ireland. In the 1990s he was an independent member of the National Economic and Social Council. He has also worked in many other countries, most recently Cyprus and China.



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