Long live local stimulus

PLATFORM:Local communities must think creatively to provide the economic stimulus our Government cannot, writes FEARGAL QUINN

IT’S TIME for Ireland to think differently about economic stimulus. We are accustomed to thinking of stimulus packages as something the Government does for us, but what about when private organisations try to stimulate local economies?

I have a memory of a group of people in the 1960s getting together to solve a local problem; instead of sending a delegation to the government in Dublin seeking help, they said, “let’s do it ourselves”.

Last year I was asked by a group of enthusiastic businesspeople in Carrick-on-Suir in Co Tipperary to launch an employers’ strategy project. They proposed that I should make some suggestions about attracting business to the town.

One proposal I made was that they should consider a scheme that would single out their town by having a form of loyalty card in which all traders could participate. The idea caused a lively discussion, although I do not believe it got off the ground.

I was interested recently to learn that such a concept has been launched in the British town of Lewes in Sussex, where they have issued their own currency, the Lewes pound. Seventy-five towns across the US have started doing likewise. The currencies are issued at a discount, so that one dollar of local currency can be bought for, say 95 cents, making local commerce more attractive for residents.

These local currencies, of course, could not match the wider benefits Ireland has received from the euro zone, and they could never replace national currencies. But on a limited basis, they could provide a small stimulus to a local economy.

The financial crisis has turned most of our assumptions about finance and global trade on their heads. In their place have risen new assumptions, the most common of which is that the state will become more powerful in this new era. That may be the case in the longer term, but right now the state looks weak – especially here in Ireland.

A Government stimulus package is not enough to kickstart the economy. However, we can mitigate the downturn by following the lead of the Cork co-operative of businessmen who are reinstating the Cork to Swansea ferry route.

Across Ireland, local communities and initiatives must think creatively to provide the stimulus our Government cannot.

A large State stimulus package is a luxury we cannot afford, because smaller countries cannot fund big deficits as easily as larger countries. The US has the advantage of issuing debt in the world’s default reserve currency, making its borrowing cheaper. German debt is still the baseline off which most other European countries’ debt is priced. However, investors have no reason to place confidence in the Greeks, Portuguese or Irish, and the price these investors charge to lend us money is accordingly higher.

The world’s creditors might happily take an IOU from Uncle Sam, but Kathleen Ní Houlihán has to pay in cash. Or, if she wants credit at a decent rate, she has to prove that she is at least not letting her debt spiral ever higher.

While a small country could never rely on a major stimulus package, it now looks like we cannot even hope to piggyback on our largest neighbour’s stimulus. And yet, our economy needs more spending if we are to mitigate the recession.

So where could this spending come from, if not from the Government?

A small glimmer of hope is emerging in the shape of local, private plans that attempt to create a mini-stimulus in their area.

The ferry initiative in Cork, for example, could not have been provided by the State, but a small group of dedicated people who realised the benefits of the service for tourism and business in the region were able to act together and thereby save it.

Because private enterprise is smaller, it can target its mini-stimulus much better than the Government can, and therefore can ensure that the benefits from collective projects will rebound to it.

The people of the southwest knew how important the ferry service was and that they could be confident that money spent on it would flow directly to their region. This is not always the case with larger Government schemes, which spread out spending on a wider basis that sometimes bypasses their borders.

The shift by local businessmen and residents to stimulate their own economies can help some communities hang on in the face of this fierce economic storm.

We are accustomed to thinking of Government policy initiatives that could save our economies. But while the Government can alleviate some pain, it does not have the wherewithal or speed of movement to stimulate our economies in a timely fashion.

That task falls to each one of us. Although businesses and residents are also in straitened times, we at least have the benefit of knowing precisely what would stimulate our economies and can spend wisely as a result.

From improved transport links and bartering to the encouragement of local business, we must aim to create a thousand local projects like the Cork co-operative.

Government stimulus is dead. Long live the local stimulus.

Feargal Quinn is an independent member of Seanad Éireann and chairman of EuroCommerce