August 23rd Wasting a Saturday Afternoon: The Recession Diaries

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enda.JPG Over at Dublin Opinion they’re calling the leader of the Opposition terrible names – names I never read in the Bible.  What exactly did Enda Kenny say to deserve this?  Well, he said a lot. 4,000 words worth at the Humbert Summer School.  Much of it was taken up with calling the Taoiseach terrible names which then invoked a response from Willie O’Dea who called Kenny terrible names for calling the Taoiseach terrible names.  Terrible, terrible.  So I decided to read Mr. Kenny’s full speech – to divine the specific proposals he would bring to get us out of this recession.First off, we have to note Mr. Kenny’s style.  He tries to do macho.  He gets that testosterone mojo cranked and delivers his proposals in an approximate he-man style.  For instance, when launching his party’s proposals on public agencies he didn’t call for a ‘merging’ or an ‘integration’ – he called for a ‘cull’ of ‘quangos’.  Cull – tough talk that.  He also likes the word ‘cut’.  Much tougher, harsher consonants, than ‘moderate spending increases’.  He used ‘cut’ (or ‘cutting’, etc.) 24 times in his speech.

Just as well since the Fine Gael solution to the recession, contained in ‘Recovery Through Reform’, boils down to ‘cutting’: cutting growth in spending to 4 percent up to 2011, cutting each Department by 1 percent, cutting public agencies.  So hopefully we might get a bit more from Humbert.  His first call to arms:

‘. . . what this economy needs is much more than cutbacks. It needs competitiveness . . . Competitiveness will come about when Big Government get the hell out of the way of Irish businesses. Big Government – and we’ve had it only in the last ten years – has forced business to run a gauntlet of red tape, regulation, bureaucracy, duplication and stealth taxes.’

Oh, sweet mother of mercy.  Big Government?  (The capital Big is Enda’s.)  The Irish state spends less and taxes less than almost any other EU state, but Enda calls it ‘Big’ with a capital B.  And I’ve discussed the issue of regulation before – on every international benchmark we have one of the ‘lightest’ regulatory regimes of advanced countries.  In fact, our regulatory regime is so ‘light’ that we are the poster nation-child of the Heritage Foundation – one of the most anti-state groups in the Milky Way.  If Enda is telling us that the reason we have an historically weak indigenous sector is because of ‘red tape’ and ‘big government’, then he might as well tell us there’s tiny people inside our refrigerators who turn out the light when we close the door.

Enda evinces a severe lack of understanding of the chronic problems in our economic base.  He is content to buy into the old canard that any company that operates in Ireland is Irish:

‘Irish exporters, throughout the nineties, built up a huge share in world markets. From a peak in 2002, it dropped 15% in three years.

Hah!  Foreign capital, using Ireland as tax-dodge base, increased market shares, not Irish exporters.  Our home-grown ‘entrepreneurs’ did grow one particular share – between 2000 and 2006 they sent out €50 billion in overseas property investment.  To be fair, he does call for ‘lean, mean effective support for indigenous support for indigenous industry’ (yes, his words – ‘lean, mean’).  And what is this support?

‘(It) doesn’t cost money. It just needs understanding of what makes things happen and the determination to make them happen. If it means running a coach and four through every Government Department, regulator and Quango, it has to be done and done quickly. The Taoiseach must have the bottle to close down the wasteful Quangos and do it quickly.

Good grief, right back where we started.  So let’s go on to a second main point:  property and construction.  Apparently, Enda has ‘constantly pointed to the dangerous over-dependence on construction’.  I know this because he tells me.  Of course, he didn’t point to this danger in the Party’s election manifesto.  Not one word about this danger.  Indeed, the manifesto called for more demand stimulants (just what we needed – an over-heated property market and Fine Gael wanted to throw oil on the fire).  So here’s an offer – if any reader can find a statement from Fine Gael in the run-up to the last election pointing to the ‘danger’, I will buy them a pint.

But what about now?

‘Fine Gael would further cut stamp duty for ordinary families . . ‘

So, no cuts for extra-ordinary, unusual, astonishing, amazing, bizarre, odd and just plain weird families.  Now the question I have is this – what the hell (using Enda’s tough vocabulary) does cutting stamp duty have to do with the construction downturn?  The first-time buyer is already exempted from stamp duty.  The only beneficiaries would be second-time buyers swapping with each other.

I won’t even ask the more fundamental question – do we really want to respond to the consequences of a property bubble by risking another one?  What this ultimately shows is a profound ignorance of what is currently happening in the market – that builders won’t start building until (a) they get rid of the unsold stock and (b) marginal renters (those waiting to buy) feel prices have reached bottom.  Cutting stamp duties will have no effect on these processes.  As to the fundamental issue – Enda is just as silent on this as he was on the issue of indigenous enterprise and wealth generation.

To do a proper deconstruction of his speech would require volumes.  One small point: he (rightly) criticised the Government for postponing IT investment in schools – saving €250 million.  With all the cuts, how would Enda pay for this one (among hundred) of important investments?  He wants to cull ‘quangos’ (saving: €50 million a year) and cut administration in the HSE (saving: €100 million).  These two savings wouldn’t pay for the IT investment – and Enda wants to cut stamp duty revenue. And cut spending growth to near zero in real terms.  Does any of this compute?

The fact that Fine Gael comes out with nonsense is nothing new – they’ve been championing nonsense for decades (and losing elections).  What the Left and, in particular, Labour should be doing is jumping all over this nonsense.  It should denounce this rubbish for what it is – Fianna Fail-lite but without all the corrupt craftiness and inimitable deceit that gives Fianna Fail such body. For the Left faces two enemies: Fianna Fail and Fine Gael.  We have to dispatch the latter before we are in a position to take on the former.  And Fine Gael is giving us a gift – every time Enda Kenny opens his mouth.

No, we don’t have to employ the language used by Dublin Opinion, that terrible name calling and the like.  Even if it’s true – absolutely, positively, 100 percent without any doubt whatsoever – that Enda Kenny is a Mcf***wit.

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