Leaders tinker at margins while waiting for recovery


OPINION:Just how much power does the Government have, asks STEPHEN KINSELLA

LET US define power as the sustained execution of intended outcomes. What you want to get done, gets done, more often than not. How much of this type of power does the Government have?

Rulers can physically coerce their citizens through force of law; they can change the incentives citizens might face to alter their behaviour; or they can try to change the minds of their citizens through propaganda, spin, and PR. The Government can change the law marginally with the appearance of being proactive, for example, by increasing pressure on criminals, reducing your civil liberties, or introducing idiocies like blasphemy into the canon.

The Government can use the budget to change the incentives you face daily in your decisions to work, consume, and save, by changing the taxes and benefits you receive through social welfare.

Finally, the Government can try, through sustained spin and PR, to change your opinion. The Government really only needs to do this in a concerted way when it faces either a crucial vote, or the likelihood of largescale social unrest.

What are the Government’s intended outcomes for the rest of 2009? Broadly, the Government needs to begin to return the State’s finances to something approaching solvency; it needs to pass the Lisbon Treaty; it needs to appear to be proactive while waiting (and praying) for the international economy to recover to initiate export-led growth, and to give our unemployed citizens places to emigrate to (which will help stop the haemorrhaging of the public finances).

Now, how likely is it that the Government will achieve any of its intended outcomes?

First, political expediency dictates that the Government is likely to refuse to implement many of the McCarthy Reports’s more radical suggestions, leaving the decision at budget time between some combination of increased taxes and increased borrowing, rather than really deep cuts in public expenditure. Repeated electoral immolation is not a prospect Irish politicians delight in.

The implementation of Nama (the vehicle by which our banks’ balance sheets will be restored) is a wild card, which could go either way for the Government, and we won’t see any real action on Nama in any case until 2010.

Second, only a sustained PR barrage from now until October can help to turn Lisbon the Government’s way. The Government must turn the Irish people’s fear of an uncertain economic future to their advantage by blending that fear with the hope membership in good stead of a stronger EU might give them.

Third, the Government has no power whatsoever on the recovery of the international economy.

Given the current Government’s extant constraints, one is left with the rather unfavourable impression of a powerless ruler, tinkering at the margins – trimming here, paring there – and all the while playing a waiting game, hoping for a growth dividend from the international economy.

Stephen Kinsella, lecturer in economics, Kemmy Business School, University of Limerick