It was Lenin who once said that quantity had a quality of its own. If only this were true as far as economic growth is concerned. But the more evidence that emerges about the economy's continued growth, the more concern there is about the quality, stability and sustainability of that growth. This week's national accounts for the first quarter of 2006 are no different. Economic growth accelerated, but was driven strongly by housing construction and domestic consumption, both of which are strongly dependent on a rising debt burden. The vital exporting side of our economy continues to perform poorly.
Concern about this situation has escalated during the week, with Central Bank governor John Hurley warning about house price inflation and other, related, threats. Noting how he had last year welcomed a moderation in house price inflation, he pointed to the re-acceleration of that inflation - to over 14 per cent in May - as a source of concern.
He also noted the growing gap between house prices and what he referred to as "fundamental factors" that drive them. This is as close as the Central Bank will come to telling us that property prices in this State are now overvalued. Finance Minister Brian Cowen reacted to the comments by, somewhat optimistically, urging borrowers to exercise prudence in the face of forthcoming rises in interest rates.
Instead of blaming the victims of our housing market, the Government might, as it promised to do four years ago, tackle the issue of the cost of land zoned for development. Together with our planning laws, transport system and property tax regime, this is one of the major causes of high house prices which the Government has the power to change.
Moreover, while it cannot change another cause - the rampant growth in borrowing - it should be counteracting the inflationary pressures caused by it. Instead, the impact of SSIAs and public spending increases are reinforcing them. Mr Cowen's hopes that interest rate rises will slow borrowing and house price growth are being undermined by the consequences of the Government's own policies. The present rate of inflation - confirmed yesterday as 3.9 per cent - means that borrowers continue to have a strong incentive to borrow, so great is the erosion in value of the amount that they repay in interest.
The negative consequences of inflation go beyond the monetary economy. On Wednesday - and in the presence of Mr Cowen himself - Irish Exporters Association president Don Moore identified rising inflation as a major threat to his members' efforts to export abroad. He also clearly identified this Government's fondness for accelerating public spending in pre-election years as a source of past and present bouts of inflation.
In the Dáil last week, Ministers were quick to issue dire warnings about the economic consequences of the Opposition being elected to office. Adopting a tone of humility in relation to its own performance might be a more suitable, and politically safer, approach.