Learning from mistakes of austerity?
Sir, – Fintan O’Toole (Weekend Review, November 30th) is a little selective in his criticisms of the Troika programme. He argues that austerity is counterproductive because it deepens recession by cutting demand and the consequent collapse in tax revenues and rise in unemployment-related payouts make the fiscal hole bigger. He drives this home by pointing out that total tax revenues in Ireland declined by a third in 2010.
The bailout programme was signed by the Brian Cowen-led government and by the Troika on December 16th, 2010. The Troika and its medicines can hardly be blamed for the fall in Irish tax revenues in 2010. Rather the timing points to an obvious truth – the collapse in Irish tax revenues was the cause, and not the result of, the Troika’s visitation.
I agree with Fintan O’Toole that we need to understand the immediate past in the hope that we might learn from it. Current indications are not encouraging.
When tax revenues fell off a cliff in 2010 we were left with the problem of unsustainably-high levels of current public expenditure. Only a decade later we have no long-term benefits to show for the unbudgeted boom in corporation tax receipts in recent years. Rather we have repeated the same mistake of blowing windfall tax receipts on day-to-day expenditures which will not easily be reversed when the next downturn comes.
The Fiscal Advisory Council points out that Budget 2020 projects a return to deficit in 2020 even without disorderly-Brexit-related spending. It also estimates the potential reversal in corporation tax receipts in the range €2-6 billion per annum. That may not happen but it is a possibility. I have yet to hear any politician tell us how such a hole would be filled. – Yours, etc,
Rathmines, Dublin 6.
Sir, – I think Fintan O’Toole (Weekend Review, November 30th) does leeches a disservice when comparing their use in medicine to the futility of austerity measures imposed by the Troika on Ireland post crash.
Medicinal leeches are currently used, with considerable success, to promote healthy circulation, prevent clotting and blockages after complex graft surgery, thus helping the patient return to full health.
Fintan O’Toole’s analysis of the Troika’s imposition of austerity on the patient points to pain and delayed recovery – the humble leech should be defended from such odious comparisons.– Yours, etc,
Tarbert, Co Kerry.