Democracy and Economics
Deaglán de Bréadún
The reason Ireland’s credit-rating has gone down is largely to do with the guarantee to the banks and the fact that we really couldn’t meet the debt if they all collapsed at once. That’s my reading of what the analyst from the Standard & Poor’s ratings agency said on radio this morning.
The analyst, Frank Gill, also made the controversial suggestion that there was a need for “new faces in government”. Many would agreed but it was hardly his place to do that.
Meanwhile on Questions & Answers, accountant Des Peelo, well-known to followers of the political scene, said he believed the Government’s banking policy had worked. Could this be right?
The programme also featured a somewhat-inconclusive discussion on quasi-national government – that’s what I’m calling a situation where the opposition and government agree on budgetary/economic stringency measures. Simon Coveney exuded frustration over what he alleged was the Government’s lack of openness; Mary Hanafin was adamant that the Government had ultimate responsibility. Not much scope there.
The problems facing this government and many others were reflected also in an interview Barack Obama gave to the Financial Times yesterday. There are some quotes in it that would surely ring a bell with Brian Cowen, Gordon Brown and others.
“He concedes there is a gulf between what is politically possible and what may prove to be economically necessary.”
”In all countries there is an understandable tension between the steps that are needed to kick-start the economy and the fact that many of these steps are very expensive.”
“What is also difficult is the fact that the policies we initiate all take time to take effect and by its very nature politics looks for more instantaneous gratification.”
All this reinforces the argument that, without cooperation between government and opposition (or in the US case, Democrats and Republicans) it may be impossible to set the economy to rights. The fact is that, in a democracy, there are so many interest groups who make so much noise that it is extremely difficult for one side of the political fence to do the job all on its own. We probably need a second Tallaght Strategy a la 1987 but it doesn’t seem to be on the cards.