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General : Columns : Mark Waters Last Updated: 2, Apr 2018 - 10:02

By Mark Waters
29, May 2003 - 14:29

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"I believe that the best people to decide how to spend their money are the people themselves," is how Finance Minister, Charlie McCreevy once described his taxation policy.

While not quite ranking up there with his classic "Go out and party" (the Irish version of Bill Clinton's "It's the economy, stupid") it shows that while his political astuteness is second to none, his economic astuteness is second-last to none. A master of the sound-bite, he massages the ego of the voters, tells them that he is going to give them more money and what's more that he's going to enjoy doing it.

Of course we have to ignore the fact that the logical long-term conclusion to McCreevy's opinion is to dissolve government entirely --cut out the middleman so to speak-- and let anarchy prevail. But let's study the short-term conclusion for a moment.

Human nature being what it is, the best people to decide how their money should be spent are not in many cases the people themselves. If I have surplus income I am more likely to buy a new BMW than fund a hospital bed. Even if I am of an altruistic nature it's going to take a lot of organisation for me to be able to gather together enough likeminded people to get a hospital up and running. That's one of the reasons why we set up governments in the first place.

It's also the reason why current government policy has us driving bigger, faster and more expensive cars on increasingly poorly maintained and overcrowded roads.

The curious thing about McCreevy's utterance is how wholeheartedly the electorate bought into it. It was taken as a simple statement of fact without a second thought. Like the pre-election promises that the outgoing government gave of continued prosperity and economic growth despite all indicators showing the opposite, it seems that the people believed it because they desperately wanted it to be true.

Rather than accepting the economic realities that were dawning around us we bought into the politicians' fantasy of more good times and partying because we didn't want to face up to the uncomfortable truth. The party was over and it was time to pay the price.

It's easy to blame the politicians for deceiving us --easy but naïve. When was the last time you trusted a politician? A casual glance at the faltering economies of the world would reveal that it was time to baton down the hatches and get ready for the cold economic winter that was coming.

But we thought we were immune. We had the magical secret ingredient -although none of us knew what it was- and while the economies of the world tumbled we would march on to greater glory. The politicians --of all the major parties-- tuned into the national mood and told us what we wanted to hear. The only difference between the major parties was how they would arrange the deckchairs on the sinking ship.

We voted for them because we wanted to believe. In the back of our minds we knew things might be getting worse but we placed our faith in the magic dust of the politician to carry us through the impending storm unharmed.

So now we are left with a government elected on a mandate of managing an economic boom that no longer exists. And there's not a lot we can do about it except grin and bear it, hang on and hope it doesn't get too much worse.  It's not a pretty sight.

How did we end up here? Only a decade ago it would have been unimaginable that we could have climbed so quick to the summit of such a mountain of money only to burn it out from under us twice as fast.

The change in government in 1997 was a landmark, not so much for any specific change in policy but more as a reflection of the change in attitude and mood of the people.

The outgoing government had the good fortune to be in the right place at the right time as the economy started to take off. They recognised this and were modest in their ambition. A combination of decades of investment in education, stable worker relations, EU structural funds, attractive foreign investment policies and worldwide demand for new technology was about to drive Ireland to the dizzying heights of 'number one software exporter in the world' and 'most open economy in the world.' Previously we had the 'believe-it-or-not' honour of being the number one banana exporter in the world.  Software was a lot more cosmopolitan and sophisticated than the import and export of bananas. Or so it seemed.

The new government was elected in 1997 on the slogan of 'payback time'. That wasn't their official slogan but it may as well have been. According to them the people had worked long and hard to bring the country its newfound prosperity and it was time they got a little something back out of it. They would reduce taxes and put the money back in the pockets of those who 'knew best how to spend it'. The people agreed and gave them the mandate to fritter away the gains of the boom.

Even though the government was taken as much by surprise as everyone else at the arrival of the Celtic tiger they quickly claimed it as their own.  But having no clue of its origins they knew nothing of how to care for and nurture it. Rather than recognising their good fortune and using it to build for the future they narcissistically assumed that it would always be there and was theirs to do with as they pleased. 

They soon found out otherwise. Our open economy --which was such as an advantage in the boom years-- left us vulnerable to the shocks and vibrations of other countries. Our economy was dragged between Europe and the USA. We were part of the Euro zone but our fortunes were rising and falling on the whims of Wall Street stockbrokers. Mary Harney once proudly declared 'we are closer to Boston than Berlin' but if it was ever true it was only true now in the sense that we were cast adrift in the Atlantic and could be thrown up on any shore depending on the wind direction.

And now it really is payback time.

We will not return to the economic golden age of the late nineties. The indicators are that things will get worse before they get better and when they do get better it will be at a far more modest rate than previously. All that is left for us is to learn the lessons.

We have to learn to take responsibility for ourselves as a nation. It's all well and good having an open economy that is friendly to multi-national business but if it leaves our country in pieces at the end of every five-year economic cycle what good is it for the long-term future?

We have to recognise that we have basic needs as a country --a health service, an education system, and a proper communication and transport network among others-- which must be given at least equal priority with the individuals' right to choose how they spend their money. It is not just my altruistic 'do-gooder' instinct that tells me this. My pragmatic 'count-the-pennies' instinct tells me that it is also essential to our future economic success and long-term sustainability as a nation.

We elect the politicians. We have an obligation to vote responsibly and recognise that our interests as a nation and our interests as individuals are not mutually exclusive but are bound together.

Maybe the economic suffering that is already making itself felt will be worth it if we learn this lesson.

But will we?

About the author

The author was once the toast of modern Ireland, a shining example of a real live Celtic cub. Now, de-clawed and emaciated, he resides in an abandoned political think-tank on the outskirts of Kinnegad where he dreams of having Charlie McCreevy for dinner and banishing the ghastly animal metaphors for once and for all.


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