March 25th Evening: The Recession Diaries

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Sinn Fein has produced a substantial and positive contribution to the debate on creating and saving jobs in our recessionary economy. Getting Ireland Back to Work’ contains more than 80 proposals covering a range of employment-related subjects: job retention, investing in our indigenous base, education and training, consumer spending, etc. If there’s a bit of ‘everything and the kitchen sink’ about the document, that is no bad thing. It shows that the kitchens of progressives are large and have many implements to cook up plentiful economic meals (contrast that with the small kitchens of the orthodoxy – they have only one implement: the cleaver).

I don’t intend to summarise the whole document. Rather, I will pull out, for me, highlights.

First, job retention: that they have listed this first is absolutely correct. It is cheaper to save jobs than it is to create them. Sinn Fein proposes to establish a €300 million jobs retention fund to subsidise enterprises that are struggling to retain their workforce. The subsidy would be capped at no more than €200 or 20 percent of the wage, would last six months, and would be targeted at firms that would be profitable if it weren’t for the recession. Sinn Fein estimates that this could save 90,000 jobs over a six month period. One could quibble with this but for my part, it matters not whether it costs €300 or €400 million, whether it save 90,000 or 70,000 jobs. It is still sound.

Second, credit: Sinn Fein proposes to establish a state bank, along the lines of the old Industrial Credit Corporation (amazing how all those public enterprises that were privatised or abolished are coming back into vogue), to provide credit to enterprises that are being squeezed by the credit crunch. Even if the current Government strategy to recapitalise private banks succeeds (long odds, very long odds), no one has copped on that the long-term process of deleveraging will continue to act as a drag on new credit lines. So simply short-circuit the whole thing by establishing a bank with just that remit. This would hold even if the banks were brought into public ownership.

Third, green technology: the party calls for the establishment of Eolas Glas Éireann, a new national green technology body for research, promotion and funding of green energy and environmental technologies. There is certainly a need to coordinate the various different inputs into a strategic coherence in order to achieve an epochal shift in the way we generate energy. This will be no easy process – and for my part I don’t think it can rely on market signals and tax inducements. It will need agencies working to a national, integrated agenda.

Sinn Fein spends considerable time canvassing the ground of how we can get our indigenous sector kicked into gear: ICT investment, fast-track business start-ups, Sales Ireland and Export Ireland strategies, innovation initiatives, cluster and hub supports, integration of foreign direct investment, regional strategies, etc. It is an exhaustive list with a confident grasp of details. Yet, there is a sense that, in this area, the whole is less than the sum of its parts.

For instance, the document refers positively to the Telesis Report – a controversial report commissioned by the NESC back in the 1980s:

‘ . . the 1982 Telesis Report concluded that no country had ever succeeded in achieving sustained economic growth except on the basis of native industry.’

Sinn Fein correctly identifies some of the flaws in our indigenous base (e.g. lack of scale, the trend of selling successful Irish businesses to multi-nationals) and then claims that Enterprise Ireland – the agency charged with promoting indigenous enterprises – is in ‘desperate need of an overhaul’. But I’m not sure they adequately addressed what that overhaul should be.

In any event, the failure does not lie at the agency level but rather in the lack of a strategic framework; that is, a political failure. Had they followed through on the Telesis reference, they might have updated and reworked the report’s main recommendation: that the State actively intervene in the market and support ‘winners’ – 75 to 150 indigenous companies which have the capability to build a strong export presence.

In the absence of such a framework – one capable of actively intervening with high-road companies at the sectoral level – there is a danger that mere inducements in the forms of supports and tax-breaks will not maximise our indigenous potential.

The document is on safer ground when it comes to front-loading job creation initiatives in the infrastructural field – school building, home insulation and reframing procurement procedures to allow smaller, indigenous companies to compete. These initiatives – some of which have been championed by the Labour Party – can work as vital stop-gaps while waiting for long-term job creation initiatives to come on stream.

What is really useful are some of the detailed proposals which have the capacity to catch the public eye:

  • A GI-type bill for the unemployed to support them returning to education. For Sinn Fein, this would entail waiving fees and maintaining social welfare payments. This could be extended into something much more far-ranging – including ‘living income’ provisions which would negate the need to prematurely re-enter the market before obtaining diplomas, degrees or skills.
  • A cost-of-living package which would identify the high costs of particular goods and services and create policies to lower them – a useful policy tool that could be targeted, in the first instance, at those on low incomes. For instance, in 2007 slashing Dublin Bus fares by 50% would have cost the state less than €80 million and would save a daily commuter on low wages €400 a year, equivalent to a 2 percent pay rise (my own example and calculation).
  • A once-off household debt package whereby people could roll up credit card and other accumulated debts into mortgages. For instance, a €10,000 credit card debt could be extended into a 15-year mortgage with a monthly payment of €67 per month (again, my own example and calculation).

Such proposals are not intended to address all issues in an all-encompassing way. But they can serve as provocative snapshots, inviting people to look at the full album.

This is the first of a number of documents Sinn Fein will be publishing on the economy (public finances and reports into specific areas such as farming and tourism will follow). If their subsequent policy documents can reach the same high level of in-depth analysis and considered proposals as ‘Getting Ireland Back to Work’, the debate over the economy will have been considerably strengthened.

And Sinn Fein will have done itself (and all progressives) a considerable favour.

 

4 Responses

  1. Jer

    March 26, 2009 11:25 am

    What I find frustrating is that the consensus is moving so slowly towards the creation of nationalised banks, in some form, so as to avoid the dangers of having well capitalised banks that refuse to lend a la the Japanese zombie banks.

    A good bank will be able to operate commercially quickly and ensure that sound business models can continue to draw credit lines rather than liquidating, defaulting on loans, forcing more people into default on housing and of course driving down the govt.’s take of ad valorem taxes.

    Fianna Fail have said lets bail out the big bankers like Seanie and its to Sinn Fein’s credit that they are saying fine the banking system needed to be stabilised but we also need to bail out the small businesses and the consumers that are key to our economy maintaining some momentum.

    Good plan so lets get it implemented.

  2. alec

    March 27, 2009 10:50 am

    I cannot see where Gilmore would have major problems withthis document, yet last weekend he ruled out working with SF. This leaves Fine Gael as his only likely partners and what is the point of a labour/Fine Gael government. We must break the right wing stranglehold and build a coalition of the left.

  3. eldorado

    April 3, 2009 8:51 am

    This is terrible document. I haven’t the time to explain why but it entirely misses the extent and scale of the crisis. But maybe to labourites it looks decent – but completely inadequate imho.

  4. HeartofDarkness

    May 7, 2009 8:47 am

    Why do you support this anti-immigrant fascist party Sinn Fein? This is not a left organization at all. Sinn Fein wants to ship back all the immigrants