Don’t shoot Goldman Sachs for warning about Sinn Féin on economy

Commentators focused on fact that Goldman Sachs was responsible for financial crisis

'You campaign in poetry, govern in prose," a saying attributed to the late US politician Mario Cuomo, captures the idea that most politicians will say anything to get elected but end up making big compromises when faced with the realities of power. Our Coalition stands accused of making all sorts of manifesto promises that were quietly shelved as soon as EU-IMF troika-related reality was made apparent. Similar things can be said about most governments here and elsewhere.

According to most of the opinion polls, the most popular party in the State is Sinn Féin. The party has a very detailed economic programme which is, thanks to those polls, receiving ever-greater scrutiny. One of the latest groups to weigh into this debate was global investment banking giant Goldman Sachs. One of their top guys said last week that one of the greatest risks to the Irish economy is the possibility that Sinn Féin gets elected and proceeds to deliver on its promises. The reaction to this warning was fascinating.

Tendency towards begrudgery

First, and for the most part, commentators focused on the well-known fact that Goldman Sachs was solely responsible for the great financial crisis, including our own and most of the rest of the world’s ills. Hence, anything any current employee says can be safely ignored. We have a singular ability to believe this kind of stuff, perhaps it’s a particular example of our tendency towards begrudgery. We do seem to detest success.

Goldman Sachs alumni are transforming the European Central Bank into a proper central bank, helping to run the incredibly successful Bank of England and, well, I could go on, but Goldman’s critics would just spot another conspiracy, rather than an astonishingly talented and successful group of people. People who are generally listened to, at least elsewhere.


Second, along the lines of the Cuomo quote, there is what I will call the "O'Toole conjecture", which posits that Sinn Féin, far from blowing up the Irish economy, will merely turn into a version of 1930s Fianna Fáil. In that instance, nationalistic political promises were mostly forgotten once power was obtained. The conjecture implies (I think) that Sinn Féin would, in government, quietly shelve the taxation plans that so worry Goldman Sachs.

From a business perspective I’m not sure the 1930s comparison is comforting: Fianna Fáil presided over an economic war with Britain and an economy that two decades later still had more than half of its exports in the form of cattle.

Anti-business policies

Of course, it’s not just about the direct economic consequences of swathes of tax increases. There is, for instance, the message that your overall policy sends. Sinn Féin has complained that some people describe their policies as “anti-business”. Additional wealth taxes and eye- watering marginal (and average) rates of taxation are the best definition one could have of what “anti-business” means. Try to imagine what an executive of a tech or pharmaceutical company would think of a country with a Sinn Féin taxation system.

Most of the great lies are built around a kernel of truth. The recognition of the superficial plausibility of this technique of truthfulness is why the courts demand that we don’t just tell the truth but the whole truth and nothing but the truth.

Gerry Adams recently said that his tax plans meant that he would be asking rich people for a mere seven cent on the euro. It doesn't sound much does it? It contains a kernel of truth but misses a much bigger truth which changes the whole context.

For the self-employed, the backbone of current and future jobs growth, this means Sinn Féin would tax them at a rate of 62 per cent. These kinds of tax rates, on any reasonable definition (and on the relatively low levels of income they would apply to), are penal. They are quintessentially anti-business and, therefore, anti-jobs.