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TOWARDS A NEW ECONOMIC NARRATIVE – Michael Taft at the Irish Left Review… November 26, 2008

Posted by WorldbyStorm in Economy, Irish Politics, The Left.

Writing at the Irish Left Review today Michael Taft argues for A New Economic Narrative. Here is the introductory part of the document which you can read in full here….

Crisis? It’s baby-crunching time. We no longer have the luxury of attacking others’ prescriptions – those issued by the Government, employers’ spokespersons and stockbroker economists. The proverbial punter at the bar is impatient: ‘So what’s your big idea?’ It’s a fair question.

Let’s be under no illusion. The right is driving this debate. And the main ‘opposition’ in all this has been Fine Gael who wants more of the same. A debate? You need two sides to have a debate. All we have is the sound of one hand slapping us about.

So far, the Left, with some exceptions, has staked out a small ground. It opposes cutbacks, proposes infrastructural projects and more training places, and suggests alternative revenue streams such as cutting tax reliefs. Some good ideas but, to date, they do not cohere into a programme of expansion and renewal. They do not, as yet, constitute a new narrative.

And neither will this. It is, instead, an invitation to progressives to draft up their own programmes and proposals, to put forward their own contributions; to do better than what’s contained here. But the foundational principles must be to:

• Expand fiscally – junk the cutback vs. tax increase trap. We need money, lots of it, to put back into the economy.
• Expand demand – more spending, not less, is what the economy needs to maintain and expand business activity
• Expand indigenous enterprise: Lay the structural foundations for a new enterprise base – public and private; this will take time, so we have to start soon, tomorrow, this evening

That’s the ticket – expand, expand, expand. For illustrative purposes I have come up with a 10-point programme but no single programme can address all issues. For instance, I have not addressed recapitalising our banking system, educational investment, reducing poverty and labour market issues. In a fully-blown progressive project, these will take centre-stage.

But paramount in all this: the Left must become audacious. It must put forward its vision with courage and confidence. For the Left is right and the Right is wrong. We must defend our programme against all nay-sayers, pessimists, neo-liberals and shills for vested interests: on the doorstep, at community meetings, on RTE panels, in the Dail. No fear, no capitulation.

In short, we have to go on the offensive, all economic guns blazing. So let’s start…


1. ejh - November 26, 2008

the Left must become audacious. It must put forward its vision with courage and confidence.

Isn’t this is one of these phrases that doesn’t really mean anything because it’s hard to imagine anybody propounding the opposite?


2. Jim Monaghan - November 26, 2008

Trying to get enthusiastic about Gilmore and Burton with the Shinners equally trying to prove that they can be radical and “responsible” (at least in the eyes of the real rulers) at the same time.
The problem with a stimulus package in Ireland is that the money will be spent on imports making things worse.
But there is an argument for huge capital spending on schools and say the DIT. (just an example). This would help get the builders back to work and given the climate it would now be value for money.


3. skidmarx - November 26, 2008

Let’s be under some illusions.


4. ejh - November 26, 2008

This is a time for faint-heartedness!


5. WorldbyStorm - November 26, 2008

At least an alternative is being proposed…


6. Michael Taft - November 26, 2008

Jim, whatever about concerns regarding consumption being spent on imports in the past, in keeping with the trends in other advanced countries, a higher proportion of consumption is being spent on services which has a high domestic content. For instance, between 2002 and 2007 consumption on such services as professional, recreation, public transport, etc. expanded by nearly €11 billion, while expenditure on clothing/footwear, durable goods and cars increased by €4 billion. Indeed, the largest goods category that’s consumed is food – our largest indigenous industry.

Even so, expenditure on imports has a signifcant jobs content here: after all, goods have to be docked, transported and sold in shops – all with jobs consequences. By keeping retail and wholesale enterprises open, their expenditure on business and legal services (which has a high domestic content) is maintained.

And, as you say, a stimulus package should be heavily geared towards capital spending – as I pointed out. Cutting VAT or tax rebates would be more problematic which is why I didn’t include them.

ejh – I take your point. But there is a difference between an audacious package and an incrementalist one; the latter remains in danger of conceding the parameters as set by fiscal conservatism (i.e. the prioritisation of the budget imbalance); the former attempts to reconfigure the debate. That’s why it’s not the time to be faint-hearted!

skidmarx – what illusions are you alluding to?


7. Anon - February 14, 2009

What about a modest increase in corporation taxes? Is it really credible that this would have multinationals running? There are many well documented reasons why they are here, besides our low tax rate. The only problem is, Im unsure how much a Corp.Tax hike would actually raise (say 3%).


8. CL - February 14, 2009

Ireland is running a budget deficit equal to 10% of GDP. Yet, despite this massive Keynesian stimulus unemployment is rising rapidly and the general price level is beginning to fall. Asset price deflation, an insolvent banking system and the openness of the Irish economy is rendering ineffective this massive boost to demand. Further borrowing from international capital, at a rate 2% higher than Germany, is unlikely to change this scenario. More likely it would shift the insolvency from the banking sector to the state itself.
An incompetent, corrupt political establishment has lost its legitimacy and is unable to deal with the inevitable stresses resulting from economic decline. Irish political economy, as doctrine and as material reality, must undergo radical change.


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