More on that ICTU plan

It seems that the intellectual underpinnings of the ICTU plan for economic recovery are to be found in the Swedish government’s response to their crisis in the 1980s. A Swedish dimension is no great surprise in itself: David Begg has long been an admirer and advocate of the Scandinavian model. He was on RTE’s Q&A on Monday night and in the context of the ICTU plan, referred to the writings of an economist who worked for Goran Persson, the then Swedish finance minister. 

Curiously, more details emerged in this morning’s Irish Times in a discreet article secreted away on p.7 www.irishtimes.com/newspaper/ireland/2009/0218/1224241331376.html. According to the piece “the work of a Swedish economist who advised its government when its banking sector collapsed is being used by ICTU as the basis for its ‘social solidarity pact'”. The article goes on to name the economist concerned – Jens Henrikkson – and refers to a paper he published two years ago under the aegis of Bruegel, the Brussels-based think-tank (of Alan Ahearne fame).

I was intrigued that David Begg would identify a specific paper as the inspiration of the ICTU position and decided to check it out. I suggest that others check it out too. It is called “Ten Lessons About Budget Consolidation” and was published as part of the Bruegel Essay and Lecture Series in 2007. It can be downloaded (after a little bit of search activity) at  http://www.bruegel.org/Public/Section.php?ID=1157

If David Begg is a big fan of this guy and the approach he advocates, there is a light at the end of the tunnel. Henrikkson’s first lesson is: Sound Public Finances are a Prerequisite for Growth; his second: If You Are In Debt, You Are Not Free. He recounts, inter alia, how the Social Democrat government of the day engineered across-the-board cuts in spending, including cuts in welfare benefits.

Henrikkson has quite a few things to say that The Two Brians could usefully take to heart. Some samples: “An ad hoc hodgepodge of measures will only have a limited chance of success” and “It is of great importance that the minister for finance is conservative when it comes to prognosis”.

The downside of all of this is that whatever intellectual debt the ICTU document owes to Henrikkson is not obvious from the document itself. But maybe what Begg is saying is: if you want to know where we really stand, as distinct from the public posture we have to take, you’ve got to read this other stuff too.