'...the problems facing Ireland are too important to be left to the economists…'

Slí Eile: Speaking at the Michael Collins annual commemoration in Béal na mBláth, County Cork, former President Mary Robinson made a number of very interesting points in regard to where we stand. Two in particular caught my interest:

Ireland needs a vision of where it hopes to go; and
We should drawing on the Swedish model of consensus and tough medicine.

On the vision thing - I completely agree.
On the consensus issue - I am not sure.

Mary Robinson speaking of the Swedish response in the 1990s:

A key factor was that all sides of society, the opposition included, were brought on board so as to have as broad a consensus as possible around the tough measures that needed to be taken...The likelihood is that, in the absence of a vision of our future which enjoys broad support, every interest group will put its own concerns first and fight to protect what it has. That would be a recipe for disaster.

The '1987-88' economic consensus, here, gave us social partnership, and with it the favourable conditions (along with many other factors, of course) that saw jobs double, the population increase and living standards rise very significantly. It worked - up to a point. Poverty also continued in its various forms, and we have seen a growing inequality in access to health services - to take one area. We also built up huge 'economic dependencies' - a bizarre tax profile leaving us vulnerable in many ways, massive dependence on foreign direct investment, a relatively enfeebled indigenous sector and 'growth' - plenty of it with lots of trickle-down. As long as world markets boomed, most of us could boom along and not face the hard and difficult decisions that now arise around sharing a declining national cake, and who should be made redundant first.

The alternative to a consensus is widespread social strife. That is a recipe for disaster, as Mary Robinson correctly said. It is what gave rise, in the 1930s, to the Swedish model of partnership stretching back over decades. However, the nature of any 'consensus' needs to be considered. If the Dublin Consensus is the only variety, on offer it may be that strife is - regrettably - the only way to proceed. I sincerely hope not.

Incidentally, the two principles proposed by Mary Robinson are worth highlighting:

Example from the 'top'; and
Protecting the weakest

But taking this latter point, along with Mary Robinson's comments on education (the need to defend it), I am sure that she would also apply the same reasoning to health. So, there you have the three major components of current spending: social welfare, health and education. If we wish to continue funding these 'big three' (not to mention the banks) then we need to pay for it by way of taxes - local, income, capital, spending etc. No other way.

Can we provide a Progressive Consensus?

Slí Eile: What type of society do we have (A)? What type of society do we want? (B) How do we move from A to B? Is such a move possible and, if it is, over what realistic time scale? I suggest that in a history of the Irish (and world) economy around the new Millennium some extraordinary findings will emerge:How little was achieved – humanly – compared to the extraordinary growth rates in (measurable economic) output at the end of the last millennium; How, for many people, ‘economic growth’ did not matter and only gave rise to an over-hang of debt, insecurity and animosity; How much lipservice was paid to environmental sustainability and how little was really done to change patterns of consumption and investment to avert catastrophe.

Not that living standards have not improved dramatically over the last quarter century and with them standards of health, education, self-confidence.

But, we are still a long way from an economy and polity that places human need as the primary goal and all else as instrumental in serving such need.

The alarming narrowing of vision and discourse in recent months as a selection of headline economic indicators instill fright, panic, caution and eventually capitulation. At the height of the 1940 Blitz in London in the underground tube stations where people were talkng refuge some people took to chalking up the daily scores in terms of enemy craft downed. It was a morale-boosting move.

After a period of despondency, terror and ‘did you hear the latest,,, unemployment figures, factory closure, tax returns, Moody’s downgrade ….’, it might be advisable to stop talking about it in company and keep up the spirits and keep going. Somehow V signs are not emerging – yet – on the balcony windows of Kildare Street

This is no ordinary economic war. One of the extraordinary features of political economy 2009 is the emergence of:

A confident, strident and ebullient Dublin Consensus
A partial but very pressing focus, more than ever, on issues to do with income distribution.

I say partial because the focus here is on a new class enemy – the over-paid and under-worked public sector worker, the cosseted social welfare recipient who has enjoyed more than workhouse levels of income (has society ever moved beyond subconscious assumptions about poverty, entitlement and incentives?) and the broad mass of workers (public and private) who are deemed to be over-paid and uncompetitive.

(A sinister and deeply worrying under-current is of course the view taken on the streets about newcomers in the labour force – a topic not encountered in fora like irisheconomy and progressive economy). To deflect attention, 'bankers' get the blame often (but who let them away with it?), or 'the Government' (and who elected them and why?)

This is no normal recession. I agree with Paul Sweeney that getting out of this one will be slow (and clearly very painful). It is now timely and urgent to provide an alternative strategy to the one that has clearly emerged under the Dublin Consensus. What shall we call it? A progressive consensus?

Would it consist of broad principles or detailed policy prescriptions? What budgetary, financial and economic scenarios are needed? Does public spending need to be cut? Taxes raised? Borrowing increased? Which institutional reforms are needed? What mix of policies now – this year – and next to address the crisis and move towards the society we dream of?