EUROPE FACES a “rerun of the 1930s” if the European Central Bank fails to act in the current crisis, ESRI economist Joe Durkan has warned.
Ireland’s macro-economic state had been dealt a serious blow by the events of recent days, he told the MacGill Forum, because last week’s summit utterly failed to deal with Europe’s economic and fiscal problems.
If all countries introduced austerity programmes they would drag each other down and the programmes wouldn’t work, he said.
Ireland’s plan for recovery, which consists of driving down domestic demand and boosting exports, would only work if the world economy was doing well, he warned.
Mr Durkan questioned whether it would be worth Ireland’s while to bother with fiscal targets if the world “falls apart” in a few years.
He also said wages in Ireland were still too high, and criticised the over-regulation of the private sector and the under-regulation of State business.
He criticised the failure of many students to engage intellectually at third level, a problem he attributed to the emphasis on rote learning in the Leaving Cert.
Michael Somers, former chief executive of the National Treasury Management Agency, said Ireland was no longer “on the radar” internationally and wasn’t going to get assistance from anyone.
He said we had to be careful that our “zealotry in getting everything correct” through greater regulation didn’t put people off from coming here to invest.
Asked whether Ireland should burn its bondholders, he said if there was a time for doing this it was before the State took over the banks’ obligations. Once they had done so, it was no longer possible.
Ireland would probably get through its problems “but we may be a smaller, poorer country at the end of it all”.
Seán O’Driscoll, chief executive of Glen Dimplex, said Ireland was facing a generation of low growth and austerity which would make job creation very difficult.
Calling for job creation to become a “national obsession”, he said that Ireland should seek every type of job available and be prepared to do unorthodox things to get them.
He said the IDA should be given the same resources to operate in Asia and the Middle East as it had done successfully for 50 years in the US.
Mr O’Driscoll also called for the creation of a Dáil committee on jobs and competitiveness with the same powers as the Public Accounts Committee, a radical reduction in regulation of business and an end to data protection rules which prevent Government departments exchanging information about, for example, welfare recipients.
He criticised the view of education as a social need rather than an economic one, and said many young people who were going to college didn’t know what they were doing there. This explained why the dropout rate in Irish third level was much higher than in Germany or China.
