Fianna Fail certainly read their Sun Tzu. The legendary author of the ancient classic, ‘The Art of War’, stated that
To defeat your enemy without fighting is best.
Yes, indeed. Fianna Fail won the economics debate long before the last election began. And they hardly had to fire a PR shot. Labour’s Pat Rabbitte TD, suggested maybe it was a mistake not to confront Fianna Fail over the economy. There’s no maybe about it. How much confidence can people have in a party that has little to say about growth, jobs, incomes, etc. With Fine Gael stuck in mucho macho mode (‘We’ll stop cost overruns, We’ll jail criminals, Grrrr’), the major governing party was never going to be in trouble.
This wasn’t just a problem for Labour. Sinn Fein was rowing back at mad knots on its economic programme to find some islands of reality while the Greens were putting forward proposals that would cut public expenditure not just in relative terms, but in absolute terms (fortunately for them, not many people are interested in their ‘economic’ policies).
For a long time progressives have had little to say about the economy. Like rabbits staring into the headlights of a neo-liberal juggernaut, we scamper into the hedges to debate how the money should be spent, not how it should be created.
So how can the Left insert itself into the economic debate? One problem is that once you mention ‘economic policy’ many people think: tax rates. This is not just putting the cart before the horse, its putting the horse in a barn that hasn’t been built yet on land that hasn’t been drained. Economic policy is about creating wealth in our madcap market society, using all the levers and wit that are at our disposal, of which just one is taxation.
And here we’re into rolling rocks uphill. Many on the Left, quite legitimately, point to Nordic and social market models that prevail on the continent. However, these models emerged out of decades of their own historical, economic and cultural experience, layered in events and practices which, while we may draw lessons, cannot be imported like a software programme. We have our own model here, good or bad, and any progress the Left hopes to achieve will emerge out of that dynamic, transforming it by degrees, building on the practices and values that are current today. There is no ctrl+alt+insert command on our economic keyboard.
We have a number of potential starting points: social partnership is one; public enterprise used to be another until Fianna Fail laid most of that to waste; the cultural values that privilege ‘societal relations’ over Thatcherite ‘market values’ (even if we’re not sure how to concretise that privilege). Here’s another starting point – or a gateway issue, if you will - at the risk of contradicting my own premise. Let’s talk tax. Or more precisely:
For many, the Left advocating ‘fiscal responsibility’ conjures up turkeys and Christmas, if not outright capitulation to the concepts of the Right. Why should this be? After Reaganomics shredded the US budget, it took the Democrats and Bill Clinton to restore order (only to see Bush, Jr. at the shredder again). In the UK, it took Labour’s Gordon Brown to provide budgetary stability after years of Tory fiscal roller-coasting. Attacking the Right over their budgetary recklessness has a good pedigree.
Fianna Fail’ budgetary strategy resembles a sweetshop staffed by children. Throughout the election we were regaled with tales from the Economic Framework - of 4.5% real GNP growth, low unemployment, low inflation, declining debt which set the scene for substantial tax and PRSI cuts, increased spending and the piece de resistance, the National Development Plan – that €126 billion behemoth launched as the last word in economic and social development. All topped with budgetary surplus icing. Gorge, my pretties – and vote Fianna Fail.
But only days after the feast, owner Bertie stepped out from behind the till to warn of ‘challenges’ ahead (read: purge). And for good reason:
- 4.5% GNP growth: Even the NDP suggested growth could be lower. The ESRI is predicting 3.7% next year with Davy even more pessimistic at 3%.
- Consumer spending: Davy predicts that growth from this component of GNP will fall by nearly 2/3 next year, hitting tax revenue growth.
- The Framework is based on an average 2% inflation over the next five years.
- With inflation running at 5% in the last six months, we’re making a poor start.
- Housing starts are down, property prices are down and private sector credit growth is tailing off.
- Employment growth is declining rapidly with unemployment already running marginally ahead of the Framework predictions – and that’s before the construction job losses kick in this autumn.
According to the ESRI, the Government’s projections are out about €900 million; Davy suggests it could be as high as €1.4 billion. And that’s before Fianna Fail tax-cut, spending-increase Manifesto proposals.
On what basis can the Left approach this binge-and-purge economics?
- Attack Fianna Fail recklessness with figures, projections, assumptions and promises they know they can’t keep – a late 1970s redux.
- Call for fiscal responsibility, rectitude, probity or whatever one’s favourite word is (I kinda like ‘social democratic rectitude’ but it is a mouthful).
- Denounce any cuts in either income tax or PRSI levies.
- And declare that a future Labour government will repeal any cut in said tax rates and levies.
Fiscal responsibility could become a gateway for the Left – to critique Fianna Fail’s ineptitude for allowing the economy to be so dependent on property and consumer spending, blithely ignoring the indigenous enterprise and export sectors, making a mockery of regional policy. Denouncing tax/PRSI cuts doesn’t address these issues directly, but they do tee them up.
Fiscal responsibility could form part of a new campaign to launch an open and honest dialogue with the electorate over the nature and role of taxation. An open and honest dialogue? Well, it would be such a novelty that people would certainly listen, even if they didn’t agree at first.
Fiscal responsibility could allow Labour to get out from under their ill-conceived 2% election tax cut. I don't intend to rehash those arguments except to point out that it was primarily a 'political' proposal and, on its own terms, failed utterly.
Finally, a policy of repealing tax cuts would put clear water between the Left and the right, Fine Gael included. While that party might want to latch on to fiscal responsibility part they would err towards the slash-and-burn approach to Government spending.
Fiscal responsibility could give the Left time – time to work out comprehensive and courageous policies on wealth creation (not to mention increasing taxation and expenditure under a social renewal programme - but let's not get ahead of ourselves). And on the way we might hook up with some interesting allies. Didn’t Marc Coleman encourage the Left to soak the inheriting rich? Jim O’Leary might have been a tad sensitive when writing on this site, but his point about efficient state spending is valid - the Left have to be hard-nosed about spending to reassure the electorate that expansionary programmes can work by the numbers (here’s a small start – eliminate subsidies to fee-paying schools; its regressive and a waste of money). And certainly Richard Delevan's analysis on the underlying failures of the Shannon region could be incorporated by the Left into a more interventionist strategy. By taking on board the better points from analysts not usually sympathetic to the Left, we can refigure the arguments in unexpected ways.
The Left would do well to pull Sun Tzu down from the shelf. After a close reading they might see how using fiscal responsibility could give the Left the tactical initiative. As the Master himself stated:
In battle, confrontation is done directly, victory is gained by surprise.
After all, this is war.