Rory O'Farrell: Sometimes in the debate on the plan with the Troika people point out that we are in recession so the plan has failed. However, the stated aim of the Troika plan is not to return us to growth. The stated aim is to return us to the markets, in order to finance the national debt. Therefore when we criticise the Troika plan we must distinguish between whether the aims are appropriate aims, and whether the plan is achieving these aims.
We are often told that that Ireland is meeting its targets, the plan is on track, and so the plan is achieving its stated aims. Is this the case? In March the EU released its winter review of the Economic Adjustment Programme for Ireland. Page 63 of the document (page 66 according to adobe) shows Ireland getting a clean sheet, hitting 6 out of 6 targets, a performance any hurling All-Star would be proud of.(Click graphic to enlarge)
So should we give the Troika plan a medal? No. Page 62 of the pdf (Adobe page 62, document page 11) containing the ‘Memorandum of Economic and Financial Policies’ shows the original targets from December 2010. Ireland was on target up to 6-months after the plan was introduced, but has missed all other targets. Rather than hit 6 out of six, we score a measly 2 out of 6.
When we are meeting the targets, it is only because the targets are being changed. It is as though the ref sees the sliotar sailing right and wide, and so signals to the umpires to move the posts to meet the sliotar. That’s not lovely hurling.
Rory O’Farrell is an economist at the Dept of Economics, OECD, with extensive post-PhD international work experience. His research has been in the area of public policy, labour economics, fiscal policy and monetary policy. He has experience with macroeconomic modelling, calibrating Mortensen-Pissarides matching models and forecasting.