Enlightened self interest policy prevails over `greed is good'

THE ending of recession in the western world and the re-election of President Clinton have stimulated political debate about …

THE ending of recession in the western world and the re-election of President Clinton have stimulated political debate about whether wealthy elements in society are prepared to pay for social cohesion.

Middle-class voters in the US rejected across-the-board tax rates of 15 per cent promised by Bob Dole in favour of the more limited, but targeted, reliefs offered by Mr Clinton. The winning strategy was devised by Dick Morris, chief electoral adviser to the President, and was based on opinion poll data which found that the "me" decade of the indulgent, money-hungry 1980s, had given way to a "we" decade of the 1990s.

Writing about his approach, Mr Morris said: "People want to vote for what is right and just... they are not motivated by self-interest nearly so much as by the public interest."

Perhaps. Enlightened self-interest might describe the phenomenon more accurately. After the Reagan excesses which led to a "Greed is Good" approach in the US, the electorate was counting the cost in terms of spiralling crime rates, growing drug abuse and homelessness, the implosion of the education system and worsening health care.

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There is not much point in being rich if you can't enjoy it; if you live in fear of murder and mayhem in a society where the centre cannot hold. So, when Mr Clinton offered moderate income-tax cuts for low-paid workers, along with tax reliefs on college fees and for companies employing welfare recipients, he struck a socially-responsive chord.

Research in Britain has identified similar public attitudes. Last year, the Social and Community Planning Research agency found that 87 per cent of respondents (up from 72 per cent in 1983) believed the gap between people with high and low incomes was too large.

People prioritised spending on health and education - even where the link between higher spending and higher tax levels was made explicit - with 77 per cent and 66 per cent in favour, an increase of 15 points in both cases since 1983.

Citizens see most, but not all, types of public spending as being of benefit to themselves as well as to the country and, according to the survey, "the more a particular area of spending is seen to serve both functions, the higher priority it gets in the pecking order for extra spending."

As for the "haves" in society, the report states: "Contrary to popular belief, those on high incomes do not resist higher spending . . . they are rather more inclined to support higher spending funded through a progressive tax than through a flat tax rate, even though they would get off more lightly under a flat tax.

"Some 54 per cent of those with private medical cover, compared to 67 per cent without cover, regard higher health spending in their own interest. People with children in private education are even more likely than others to see education spending as a top priority."

The British Labour Party obviously distrusts such research. Having lost the last general election by promising significantly higher taxes, it now offers a tax freeze. Gordon Brown, the shadow chancellor, unveiled his election package on Monday and caused as much surprise to his own followers as to Conservatives. There would be no income-tax increases for the life of the government; no extension of VAT; a possible 10 per cent income tax rate and a public service spending freeze for two years.

Mr Tony Blair appeared to be offering the electorate a continuation of Conservative policies, with a simple change in personnel.

The Liberal Democrats took a different approach. As the British general election campaign got under way, the party confounded journalists by proposing a 1 per cent increase in income tax, specifically to fund the collapsing education system and to provide a skilled workforce. They were offering a middle road: a modest increase in tax to pay for a service which would benefit all.

Here at home, the debate is already hotting up, with the Government parties of Fine Gael, the Labour Party and Democratic Left being condemned as tax-and-spend profligates; Fianna Fail as economic opportunists and the Progressive Democrats as neo-Thatcherites.

In spite of policy differences between the parties, the shape of economic policy for the next three years has been largely decided by the negotiations between the Government and the social partners on a new pay deal, entitled Partnership 2000.

Even as Ruairi Quinn prepares to shift the focus of his tax cuts from low-paid to middle-income workers in the Budget, the larger picture still includes a commitment to investment in deprived communities so as to counter crime levels and drug abuse, along with the need for better education and health services.

Fianna Fail has taken the vision of a caring, more equal, society on board. There isn't a whisper about cutting the top rate of income tax.

As the major - and minor - political parties adopt a caring, developmental image, the Progressive Democrats are finding the going distinctly rough. Michael McDowell, spokesman on finance, had to forget the past and announce that the terms of Partnership 2000 were acceptable, in spite of its negative implications for the party's promise to cut income tax to 40 and 20 per cent.

The Progressive Democrats, with their distinctive "cut taxes and get the government off our backs" approach, were an obvious target for a Government under pressure. Dick Spring took the first cut. He suggested Mr McDowell and his right-wing economic programme would eventually frighten the electorate and cost the PDs votes.

A similar conclusion may have been reached within the party. Mary Harney went on RTE Radio yesterday to cry "foul" and issued a statement complaining of a "hate campaign" being waged against Mr McDowell. Simultaneously, and to show his heart was in the right place, the party's spokesman on finance called for "a £10 increase in carers allowance".

Alan Dukes got in on the act by calling Mr McDowell "the biggest cry-baby in Irish politics". The man who dished out abuse "in unmerciful doses" and who had described Mr Spring as being "morally brain dead", was now "running for the shelter of his big sister," Mr Dukes said.

It was political fun. But it didn't disguise the important economic/social questions that will be posed in the coming general election.