Ireland is a small country with a very odd political system, and so we don’t necessarily expect our politicians to be economic experts.
We do however expect them to get the politics right.
The title of this post comes from a piece by Brendan Keenan in yesterday’s Sunday Independent, in which he adds his voice to the growing calls for a broad-based and front-loaded approach to solving the state’s financial crisis. I fully understand the initial reluctance by the government to take too much demand out of the economy too early, but as Philip, Patrick and others have pointed out, growing levels of uncertainty may be doing more damage to consumer spending at this stage than would be associated with the increase in taxes that everyone knows is going to have to take place sooner or later. And clearly demonstrating that the government is in control of the state’s finances is important, not just in its own right, but because of the implications for the credibility of the bank guarantee.
To these economic arguments can be added a political one that is to my mind equally compelling: trying to solve the fiscal crisis in a piecemeal manner will be politically extremely difficult, if not impossible. As Jeff Sachs used to say in a very different context long ago, you can’t cross a chasm in a series of short steps.