September 16th Evening: The Recession Diaries

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cinema1.JPGI admire people who have absolutely no shame about going public with their proposals, no matter how weird, strange and utterly nonsensical those proposals might be. Such people don’t care whether they appear foolish; they are in too much of a hurry to get their little pearls into print. They must feel enormous self-satisfaction that us mere mortals can only read about it, regardless of the hit they take to anything resembling credibility. I admire such people. I admire Alan McQuaid, economist with Bloxham Stockbrokers.

Alan has enriched all of our lives with his recent 10-point plan for the economy (I only use the word ‘enrich’ because I believe the absurd has much to teach us). Let’s go through them.

  • Alan wants income tax and stamp duty cuts. Don’t mind that we are in the middle of an Exchequer crisis (and that cutting stamp duties has nothing to do with first-time buyers), let’s make the crisis worse for no rational purpose.
  • Alan wants to subsidise profitable enterprises, regardless of whether they need the subsidy. Alan wants an effective subsidy to highly-profitable banks and lenders to get mortgages released (he doesn’t say how, but probably by the State becoming the guarantor of the mortgage). He also wants more tax relief for exporters, regardless of which sector (if any) needs it.
  • Alan wants to privatise the remaining state enterprises. I guess he thinks the asset-sweating, investment-falling, quality-deterioration of Eircom is just what we need – and lots more of it.
  • Alan wants to cut VAT on energy to provide relief from high costs. Alan knows that the maximum cut in VAT on, say, electricity is one percent. For a company with a €5,000 per month electricity bill, this would mean €50. Alan seems to think this saving is more important than ending the Regulator’s price-fixing which would net companies and households a whole lot more.
  • Alan wants to cut real wages. And maintain our low corporate tax rates (wow, I didn’t see that coming). Alan also wants to ‘maintain Ireland’s high standard of education. Obviously, Alan hasn’t read current, or previous, OECD reports on our education system. Alan is apparently not familiar with our over-crowded, cash-poor, highly-indebted primary school system. Alan is easily satisfied.

Let’s recap: Alan wants to cuts the State’s revenue stream while at the same increase spending – all the while the Exchequer is in meltdown. I doubt that even Alan’s compadres in the neo-liberal world would go as far as he has. This is not rational economics, this is ideological delusion.

What makes it all the more interesting (and ultimately revealing of Alan’s ulterior agenda) is that his own economic projections undermine his over-the-top reaction. 2008 will be the worst of it. By 2010, according to Alan, we’ll be back in clover – with 4 percent economic growth, falling unemployment, increased wages, consumer spending and investment. Now, if I believed that (and I’m extremely dubious), I certainly wouldn’t be rushing around with headless-chicken proposals. I suspect that the recession, short-lived as Alan projects, is just an excuse to argue for proposals that have nothing to do with getting us out of a recession. Indeed, if his proposals were implemented it would make the situation a whole lot worse, but it would give Alan another opportunity to argue for even more of the same (why not privatise fire departments, roads, schools and hospitals?).

Let’s leave Planet Alan before the air chokes us. Let’s breathe a more rational atmosphere, where economic proposals are judged against their effect on the real world, not some fantasy land.

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