Why the signs of economic recovery are nothing to crow about
‘Given that a recovery was always going to happen, it has been a long time coming. And the damage done is profound: €200 billion of public debt passed on to the next generation’
‘By Stiglitz’s measures – how long it takes for recovery to happen and how extensive is the damage caused in the meantime – the success of the twin-track policy of feeding dead banks and starving public services for the most vulnerable is not at all obvious.’ Photograph: Getty Images
The cock crows just before the dawn. Then the sun comes up. In the cock’s tiny mind, this sequence suggests an inescapable conclusion: the sun rises because I, selflessly, leave my cosy coop in the dark and stand on top of the stinky midden.
If I had not made the tough decision to get up and crow, willing all my feathers to bristle with magnificence, the sun would not have risen. If the sun had not risen, the earth would die. I, the cock, am the saviour of the earth. For cock, of course, read Coalition. The Government thinks its crowing about tough decisions has created an economic dawn. The abysmal performances of the Coalition parties in last week’s byelections suggest the public does not quite follow its line of reasoning.
I learned about this particular form of stupidity when I was 18. It is called post hoc ergo propter hoc – B happened after A, therefore A was the cause of B – and it is the most egregious of logical fallacies. But, in establishment circles, it is the obvious truth: we obeyed the troika and combined brutal “austerity” for ordinary people with a giveaway for the bondholders of dead banks .
Now the economy is – albeit in a fragile and uncertain way – beginning to recover. Thus, the truth shines forth – the economy is recovering because we slashed but did not burn. Cock-a-doodle-doo! This truth is so self-evident the Government is flabbergasted people in Tallaght and Ballaghaderreen don’t get it.
Economies recover. Here is the Nobel Prize-winning economist Joseph Stiglitz : “Every downturn comes to an end. Success should not be measured by the fact that recovery eventually occurs, but by how quickly it takes hold and how extensive the damage caused by the slump. Viewed in these terms, austerity has been an utter and unmitigated disaster.”
This is not hard to grasp. Downturns end. Why? Businesses and families postpone spending when times are bad, but they can’t postpone forever. You can decide not to buy a new car this year and next year and the year after, but eventually the car has to be replaced. You can decide not to have a baby this year or next year or the year after, but eventually your body clock starts sounding the alarm and you have to make that leap now. And when you do, you have to think about other things: a bigger house, for example.
The Government, however, is the cock on the midden: we continued to pour billions into dead banks and caused irreparable damage to the lives of vulnerable children, of people with disabilities, of everybody who doesn’t really matter – therefore the economy is recovering. Only a fool would claim that the bursting of Ireland’s bubble economy was not going to cause horrendous problems or that public spending (much of it wasteful) could simply continue as if nothing had happened. But was it really wise to spend vast sums paying off bank bondholders whose gambles had gone wrong? Was it wise to allow such a sharp increase in child poverty when we know how enormously costly that condition is? Did these policies really make us more fiscally stable?
Just look at the recent figures on the health status of three-year-olds, the children of the worst years of so-called austerity. One in six has a serious long- term health condition and those in the poorest 50 per cent of households are 50 per cent more likely to be in this state. Even leaving aside the personal misery and the shameful implications for social justice, think of the fiscal consequences: enormous costs to the health services, the need for educational supports, and long- term economic under-achievement producing higher unemployment costs and lower tax revenue. How is this fiscally responsible?
By Stiglitz’s measures – how long it takes for recovery to happen and how extensive is the damage caused in the meantime – the success of the twin-track policy of feeding dead banks and starving public services for the most vulnerable is not at all obvious. Given that a recovery was always going to happen, it has been a long time coming.