Thu Jul 30th, 2009 at 09:46:21 AM EST
Irish economic and political debate is currently at a level that leaves me shouting at people on the radio and frothing slightly at the mouth while reading newspapers: the Dublin Consensus, as progmulated by the business organisations, main political parties, "mainstream" economists and economic commentators is depressingly familiar:
1. Sort out Banking through some form of toxic-containment (folks differ on the details)
2. Frontload big, immediate cuts in nominal wages in the private and especially the public sectors (real ‘plain vanilla’ cuts and not just voluntary contributions from the judiciary, contrived ‘pension’ levies and various stealth charges)
3. Frontload big, immediate cuts in public spending across the board from pay (see above) to social welfare (‘the highest in Europe’ false claim) to ‘wasteful’ capital projects to other items
4. Bring the low and middle-income groups back into the tax net
5. Downsize and reform the public sector
Proceeding from that common wisdom - and how to achieve step 1 is the main point of contention - the serious people are explaining that, as a high-wage economy we need to cut wages "to be competitive". Despite Irish wages being below the EU average.
That we need to reduce wages in the public sector, which are only high if you compare them to all private sector workers but low if you compare them to the financial sector and about right if you compare them to the industrial sector.
That we need to reduce our impossible level of public sector expenditure, even though that's low by international standards.
That we don't tax the poor enough but that raising taxes on the rich would destroy the economy.
The people on Progressive Economy do a much better job of covering the issues than I have the skill or time for, Read it and weep or froth as the fancy take you.
Now, you might think this is a local problem, but I think it's symptomatic of the current EU response to problems. The Commission has and is involved in discussions with the Irish government on the response to the recession and it seems that further implementation of a programme of taxing, reducing services and transferring money to the financial sector is either approved of by or, possibly, demanded by the Commission and the Council. They have learned nothing from the crisis.
The same people are in charge, with the same philosophies, unable to admit mistake or change course in any significant way. A new election here would simply bring to power a party which would be more ideologically committed to the Consensus than currently.