The Tanaiste, Ms Mary Harney, showed political courage when she nailed her ideological colours so unequivocally to the mast (The Irish Times, July 28th). In doing it, she issued an important challenge to all of us to clarify and make explicit our vision for the future of this society.
Central to her vision is economic liberalism and its decisive role in transforming Ireland over the past decade. She devotes most of her article to the role of tax cuts in achieving this transformation. We largely agree with her that the high levels of economic growth of recent years can be attributed in no small part to policies of economic liberalism.
However, we are more concerned about the social impact of these high levels of economic growth and we fundamentally disagree with her argument that this growth has resulted in a more inclusive society. Her assertion that "an enterprise economy is what creates an inclusive society" flies in the face of mounting evidence.
Two words are crucial in this assertion. The first is enterprise. Although there is some evidence of Government moves towards creating the conditions for the growth of an enterprise economy (such as more funding for research), the economy displays only some of the innovative indigenous capacity that characterises such an economy. Instead, it resembles far more a dependent Third-World-type economy, extremely reliant on foreign investment.
The second crucial word is inclusive. In this regard, we wonder what evidence the Tanaiste has to support her assertion. Perhaps she is pointing to the recent ESRI data which show a reduction in the percentage of those they describe as "consistently poor". This is based on what they call "deprivation indicators" but, far from measuring inclusion, these indicators are a measure of simple survival, such as having a warm overcoat or meat once every two days.
A far more telling measure of inclusion is the percentages of the population whose income has declined relative to the rest of society and, on this, the same ESRI data show a dramatic increase in poverty between 1994 and 1997. Furthermore, a recent Combat Poverty publication shows there have been growing numbers of women entering poverty, especially lone parents, women working in the home and older women.
The impact of growing employment on social inclusion is also called into question by recent data showing, by international standards, a large rise in earnings inequality and in the numbers on low pay, especially women. These are hardly the marks of an inclusive society.
What Mary Harney's assertion entirely overlooks is overwhelming international evidence that economic liberalisation has resulted in an ever-growing gap between rich and poor. For the last two years Ireland has come second-last on the UN's poverty index for developed countries.
This gets us to the heart of the Tanaiste's argument about tax cuts. While we agree that PAYE workers on average incomes have been overtaxed for many years, reducing tax reform to the issue of cutting taxes is grossly to oversimplify. We see tax reform as a possible instrument for creating an inclusive society, but a focus on tax cuts alone avoids many of the key issues.
For example, the first Budget of the present Government targeted its tax cuts inequitably towards the better off. Also, it is interesting that the OECD recently recommended that a property tax might make a positive contribution towards resolving our current housing crisis. On these sorts of issue the Tanaiste is silent.
A necessary, though perhaps not sufficient, condition for building a just and inclusive society is a decent level of social spending. On this again Mary Harney is silent, perhaps because EU figures show us to have the lowest level of government expenditure relative to GDP in the Union.
We are, in fact, a low-tax, low-spend economy, and the social results are all too evident in high levels of functional illiteracy, in the neglect of affordable childcare, in lengthening hospital queues, in traffic chaos, in huge increases in the numbers on local authority housing lists. Some of these problems could even be worse were it not for the large amounts of EU social spending here over recent years.
But history teaches us that levels of social spending alone are not enough to translate economic growth into social equity. This requires a committed and efficient state (as even the World Bank has recently admitted) and an active civil society. In reducing the complex challenge of successful and equitable development to cutting taxes the Tanaiste ignores these wider issues.
In essence, we need to clarify what sort of society we wish to create. As the Economics Nobel Prize winner, Prof Amartya Sen, is fond of saying (quoting Aristotle) economics is simply a means; what is important is the end we wish it to serve. For example, how will we use our economic prosperity for the future well-being of our society? This is an ethical as well as an economic question.
The Tanaiste says she believes that "people are the best judges of how to spend their own money". Few would disagree with this. But there is a deeper reality. Everyone in Irish society does not have the same chance of achieving success, due not to their lack of ability but to the social class into which they are born, to their gender, to disability or to ethnic origins. We are, in other words, a profoundly inequitable society, as an extensive amount of research over the past three decades has documented.
A key question, we believe, is how we use our resources to reduce and overcome these inequalities. This takes precedence over any right to individual consumption. Thus, the choice is not between "a liberal economy or a leftist economy", as Ms Harney puts it, but between an economy that serves the interests of a just and equitable society, and an economy that makes society subservient to its needs.
These are important questions that require far more careful attention among Irish opinion-formers and policy-makers than they have so far received. The Tanaiste's rhetorical question as to whether there are any socialists left does no justice to the complex issues involved. The socialist tradition, at its best, embodied a vision of a just and equitable society. So does feminism and an ethical tradition stretching back to the Greek philosophers.
Rather than trusting in the free market, these traditions have far more to offer us in addressing the challenges of building an inclusive society in Ireland today.
Dr Katherine E. Zappone is chief executive of the National Women's Council of Ireland and a member of the National Economic and Social Council. She writes in a personal capacity. Peadar Kirby is a lecturer in the School of Communications, DCU. He is currently completing his PhD thesis for the London School of Economics on the links between economic growth and social inequality in Ireland