Slí Eile: The right have uncovered evidence that, with the average rate of price deflation accelerating, the 'real' value of social welfare rates to the unemployed, sick, children, pensioners etc has increased by some few percentage points since the 'pre-October 2008' position (post by Colm McCarthy on irisheconomy Friday 14 August). And they're going to town on this. A number of observations are in order: I couldn't agree more. But, does the 'left' have one?
1 The real value of SW rates, as measured by changes in the CPI and HICP, has increased (as have some other forms of income, by the way as CSO earnings data series confirm). So what?
2 Cutting nominal SW rates is clearly on the agenda of those determined to shift the burden of fiscal adjustment wide and far. Lets say the Snip Report was a spray-gun approach. The actual impact socially, fiscally and economically has not be tested or seriously debated (see points raised by Michael Taft on Notes on the Front). In other words, the deflationary impact of these cuts is an issue that is not being dealt with by those arguing for cuts.
3 In a very good article in yesterday's Irish Times (Minimum wage debate is a fatal distraction), Ray Kinsella points out that:
So, at the level of the individual, the family, and the firm, the issue of the minimum wage matters. But at the macro level – ie turning the economy around – it is distracting attention from what really needs to be done.I very much agree. Ray Kinsella could have also said 'social welfare rates' for 'minimum wage'.
4 The fundamental issue in the ensuing debate about SW rates is one of justice. Significant gains were made in recent years, not least thanks to the campaigning by some of the social partners. The appalling economic mess we find ourselves in was not caused by those who now find themselves without employment and very often without hope. But, as Kinsella observed:
...there is the devastating decline in self-esteem of those who lose their job, for reasons beyond their control. The significant increase in the number of people presenting at GPs with psycho-social stress would seem to confirm this.5 Why should some well-paid economists in relatively secure positions of employment pursue - relentlessly - a campaign to reverse the gains made (including the unforeseen very small gain of recent months - notwithstanding the rise in overall SW numbers and cuts in welfare to young people)?
6 Nobody calling for SW cuts is dealing with the wider social trauma and the fundamentally unjust distribution of income and wealth at the heart of the now defunct Celtic Tiger.
7 Lets get back to a debate on how to get people into work through new employment. Lets give hope, not continuing despair and threats of Latvian punishment on those least able to afford it.
The only way out of the growth and competitiveness cul de sac into which the economy has been driven is a strategy for growing the economy. The Government doesn’t have one.
I couldn't agree more. But, does the 'left' have one?