Madam, – It is only a few months since the ESRI was predicting the imminent end of our recession. This was posited by it as a justification for the policy of cutting incomes, particularly targeting those employed in the provision of public services, as an aid to increased competitiveness and, as a consequence, we were advised by it that our economy would begin growing again.
It was never a credible proposition, but there is little satisfaction to be obtained from the fact that events have proven it wrong. Even now, the main prescription offered by it is “more of the same” in the form of a further attack on the income of public servants, (listening to advocates of this position, one might be tempted to forget the cuts in public servants’ incomes of 14 to 20 per cent, to date).
The ESRI’s belated entry into the ranks of those who always had a more realistic view of the consequences of excessive austerity measures is welcome, not least as a partial counterpoint to the continued (though fragmenting), mistaken consensus of our economic commentariat elsewhere. Some acknowledgment, however humbling, that they got their assessment wrong, coupled with ditching the anti public servant prejudices that characterise the utterances of most Irish economists, is now surely overdue from the institute. After all, two years and soon to be four austerity budgets later, our economy is still going backwards.
The ICTU has been in a lonely place in the debate on our economy in this time. In questioning the increasingly discredited ideology of excessive austerity, the economic value system of the majority of our commentators has been challenged: hence the continuous bile directed at the unions. However, no serious observer believes, by now, that we will reduce our deficit to 3 per cent of GDP by 2014 and more of them, including the ESRI, are coming around, albeit reluctantly, to the ICTU position that to attempt to do so will stifle any chance of recovery. If this countervailing consensus could develop, we might yet have a chance of dragging this country out of the mire before it is wrecked completely by politicians acting on poor economic advice.
Above all else, our next budget needs to concentrate on investment. There is no denying our fiscal deficit and the need to address it. To do so over a longer period than the next four years, combined with a realistic use of the National Pension Reserve Fund to fund capital projects and, thereby regenerate domestic demand, will appease our lenders, improve our infrastructure and facilitate inward investment. It is an approach that is fairer and has a much greater chance of success than the “slash and burn” race to the bottom in which we are now engaged. It is not yet too late for us to come to our senses. A a healthy scepticism about our economic “experts” is a useful place to start. – Yours, etc,