Getting the digs into Greece…

Pat Leahy has another excellent piece in the SBP at the weekend which asks why is the Irish government so keen to criticise Athens? In some ways it is not a huge puzzle. Despite a nominally social democratic component the instincts of this government are reliably right of centre on economic thinking (it has been breath-taking, albeit not exactly a revelation, just how willing the LP has been to accede to the orthodoxy economically. And one has to wonder just what mechanisms or resources inside that party there are to generate thinking on economics?). And given that that reflects European thinking small wonder that they are happy to attach themselves to the overall approach.

This has led to complete absurdities. Leahy notes that the Taoiseach in a bid to be the best European around (I paraphrase) came out with some bizarre stuff:

Last week he said at least two things that required further explanation, to put it kindly.
When asked by reporters if Ireland would support debt relief for Greece, he responded bluntly: “No.”
Officials later clarified that Ireland would indeed support debt reprofiling – or stretching the repayment periods and lowering the interest rate on debt, generally thought to be a form of debt relief. It was debt forgiveness, officials explained, that Ireland would not contemplate.

And:

Kenny also said that Greece should follow Ireland’s example in correcting its public finances with growth-friendly measures. Here, he asserted that Ireland did not raise income tax.
“In Ireland’s case, we did not increase income tax, we did not increase Vat, we did not increase PRSI, but we put up alternatives to those measures proposed in order to keep a pro-growth policy and make our country competitive, grow our economy and provide jobs for our people,” he said.

To which Leahy responds:

Well, perhaps. The rates of income tax might not have been increased. But Ireland certainly increased taxes on income.
Ask everyone who pays the Universal Social Charge.

But as was noted by 6to5against, VAT increased too – in December 2011 from 21 to 23%. But I suppose such details are irrelevant.

Leahy makes the point that Dublin is merely articulating openly an attitude that is held widely in the EU, and he sums it up like so:

The political atmosphere and personal relationships around the Brussels negotiating table are toxic. But that is not the biggest problem. The biggest problem is that the two sides remain divided by issues of substance.
Let Schäuble and Yanis Varoufakis, the Greek finance minister, sum it up.
“We cannot allow any member state to spend money without limit and other member states to be liable for it,” Schäuble said on Friday at a conference in Frankfurt.

While:

The same day, Varoufakis told RTE’s Morning Ireland: “When they say that they want more pro-growth measures, what they effectively are saying is we should reduce the minimum wages, we should reduce the minimum pension further . . .
“To do this in a country where one million families rely on a single pension because everyone else is unemployed, instead of intervening in employer pension contributions, is quite absurd, and it is a proposition that I am simply not prepared to put to my parliament.”

What’s most curious about all this is that we know – indeed the SBP editorial itself argues this – that the EU/IMF approaches are futile in relation to Greece, that they cannot work economically and that what is asked of that state and its citizens is both impossible and counterproductive.

The editorial says:

The Greek people have endured massive austerity, and it has not worked, because their economy is nowhere near as open as Ireland’s is, and is without the basic tax-gathering structures to be able to balance the books as we have.
Their negotiating positions have, at times, been unfortunate and haven’t worked out. But precisely the same thing can be said of Ireland.

And yet, on it goes. Testing the EU and the eurozone to breaking point, and perhaps beyond. And to what purpose? It is impossible not, now, to regard this as ideological and political masked as the inevitable. As and when that latter is demonstrated to be manifestly incorrect one can only assume the ramifications will be considerable.