Is anyone else getting totally sick of the constant repetition of this mantra by every commentator in the land, no matter what side they are on? Every single Policitican, Journalist, Trade Unionist, Economist and any other waffler given air time or allowed to put pen to paper in the pages of the national rags has some variation on this theme.
I understand the economic principles and have studied them but Keynes is one of the most misunderstood and misquoted economists out there. His prinicples assume efficiency in spending (implying drastic knock on effects of spending cuts in recessions through money multipliers and the like on demend) and control of exchange rates and its not directly applicable to Ireland. Even when commentators espouse his principles here, they tend to pick and choose which aspects of his policies they like (for example, you don't hear anyone here calling for tax cuts).
The thing that is killing this economy is the extend and pretend as the Yanks call it. Kicking the can down the road and the lack of certainty as to whats coming down the line. I laugh when I hear David Begg this morning for example, talking about possibly killing the economy. Guess what David, the economy is dead, and its our failure to get a grapple with the deficit thats causing it.
We need to find the bottom so that we can look upwards. We need to know that its over, that yes our take home pay has just got cut by 30% but THATS IT, IT ONLY GETS BETTER FROM HERE.
The problem with the death of a thousand cuts approach is people are afraid to do anything. There is undoubtedly still a great pool of wealth in Ireland. But people wont spend it because they are afraid that worse is comign down the tracks.
Can anyone say for certain that we would not be better off now, had we just closed the gap in 2 budgets? Make marginal rates all-in 60%, limit pension reliefs to standard rates, cut property reliefs, bring the lower paid into the tax net, abolish all the useless quangoes, reallocate wasted HSE admin staff to SW or make them redundant, cut upper public servants wages by 30% and lower paid by 15%, bring in property tax, water charges, means test child benefits, cut the OAP, cut the dole, do it all in one fell swoop.
Part of the problem here is generalisations. In Ireland, we have a tendency to make policy on the basis of very broad sweeping perceptions that make no sense in reality. So try to means test or cut medical card benefits to Pensioners, and you have mass demonstrations. All public servants are poor "workers" who have been savaged by the cuts. Everyone earning over €75k/€100k/€120k[*delete as appropriate] is wealthy and not paying their fair share. All of these generalisations are totally inappropriate.
In reality, in each of these groups there are people who (because of personal choices they have made, and perhaps some element of fortune) are absolutely fine in the recession and others who are totally screwed, but the system should try to look through the groups, because if we try to cater for each individuals personal circumstances we will get nowhere. We won't know what the tipping point is until we start pushing the envelope. It can't be any worse than what we have endured for the last 3 years.