In an address to the annual conference of IBEC last week Michael McDowell offered his views on how the Irish economy had "clawed its way back" (since 1987) from economic disaster to economic success, writes Vincent Browne.
Pre-1987 (the year, incidentally when the PDs came on the scene electorally), according to McDowell, there had been a 15-year period of "economic failure", with the IMF knocking on our doors (untrue), mass emigration of the best and the brightest, massive unemployment, economic despair. He associated all this with State domination of the economy and high taxation, running at 42 per cent at the lowest rate, plus wealth taxes, residential property taxes, income levies and health levies.
Since then (1987), according to McDowell, there has been a spectacular turn-around and he attributed this to several factors: sound public finances, liberal market economics, low taxes, EU help, foreign direct investment and a stable currency.
He went on to say how much courage it took for people (such as himself, but, modestly, he merely implied that) to challenge the economic orthodoxy of the pre-1987 days,. He claimed the social-democratic begrudgers (my word) ignored issues such as investment, growth, innovation, risk-taking and incentive. He found such critiques "arch, self-serving and utterly shallow".
The Irish Times wrote, on its front-page news splash, of this address as a "powerful speech".
Of course there were pre-1987 inefficiencies in the economy which dampened economic growth and job creation, of course the correcting of a pre-1987 fiscal crisis (caused incidentally by associates of the PDs - Desmond O'Malley, Martin O'Donoghue, George Colley, Jack Lynch, and the rest of that gang), social partnership (introduced in the teeth of opposition by the PDs by their bete-noire, Charles Haughey), EU aid, a stable currency and foreign direct investment. Who ever argued otherwise, and how did it require courage to state the obvious? Yes, the liberalisation of the market helped and lower tax rates were a factor, but the thrust of the speech suggested these were the important factors.
Curiously, no mention at all of two other factors that were utterly fundamental: the change in our demographic profile and investment in education. The baby boom of the 1970s, coupled with a decline thereafter in the birth rate, puts us in a favourable position, certainly by comparison with our past. It means that our dependency ratio has declined rapidly from previously high levels. This factor was coupled with another key component ignored by McDowell, education. As the ESRI has repeatedly noted, investment in education, pursued by successive governments since the early 1960s, coupled with the demographic change, have given a huge impetus to the economy.
Now as regards the tax rate. By the time the present Government came to office in 1997 we were already experiencing exceptional levels of economic growth. So clearly, the tax rates then prevailing were not an obstacle to economic success. And, incidentally, in its seminal commentary in 1997 on the factors that caused the economic revival and on the policies that should be pursued into the new millennium, the ESRI advised a "moderate" reduction in direct taxation to allow for greater investment in infrastructure.
How then can it be claimed that the policy of reducing taxes was a key or even important ingredient in our economic good-fortune?
In that IBEC speech, McDowell included the familiar defensive cliché of reactionaries: "No one has a monopoly on compassion or social conscience." Who ever claimed they had? But the point is what compassion or social conscience has Michael McDowell shown?
At a conference some months ago in the King's Inns at which McDowell was a speaker, I made mention of conditions in the reception wing of the Central Mental Hospital in Dundrum. McDowell acknowledged they were shameful. Well, there are shameful conditions in mental hospitals around the country (although I acknowledge improvements have been made in the last decade), there are shameful conditions in prisons for which McDowell has direct responsibility, the poverty experienced by old people, still not receiving pensions of a miserable €200 a week. In a society luxuriating in extravagant wealth, welfare recipients have still not been given the minimal payments recommended almost 20 years ago in the impoverished pre-PD days. There are the awful conditions in primary schools, the failure to invest in pre-school and primary schooling to relieve educational disadvantage, and, of course, the chaos in the public health service, caused by precisely those market forces that McDowell celebrates. What compassion, what social conscience? (And we haven't mentioned Travellers and refugees.)
So what are we to make of this "powerful speech" that purported to analyse the genesis of our economic success that ignored probably the two most important ingredients and exaggerated another (tax reductions)?
How about "arch, self-serving and utterly shallow"?