Friday, March 13, 2009

The Sinn Féin Candyfloss School of Economics Fails to Convince

The School of Candyfloss Economics concentrates on the distribution of politically confiscated wealth. But it offers few ideas when it comes to the creation of productive wealth. Ireland very much needs insights into this having relied excessively and, to its ultimate detriment, on the creation of wealth through property and asset inflation and the acquisition of this through serial leveraged transactions.

The petticoat of the Sinn Féin Candyfloss School of Economics when raised slightly was less than inspiring in an opinion article by Mary Lou McDonald, vice-president, in The Irish Times on Friday, 13th March. She wants to form a new alliance and offer an 'egalitarian alternative’. A second No vote by Ireland in the Lisbon Treaty would of course expedite this goal. All of us would be equally poor, destitute. terminally unemployed and utterly bereft.

This egalitatian ambition is characterised by a potential orgy of additional public sector expenditure, platitudes about job retention and job creation. But there is not a single observation as to what type of productivity-enhancing, market focused, initiatives that are also cost-effective and economically viable, would sustain this dream. Does it ever dawn on these people that there really is no such thing as pure egalitarianism or absolute equality. These are relative terms and their achievement, to the extent that this is possible, does not exclusively depend on politicians, however indispensible they feel their contribution is and this usually involves a caricature of a nanny state, in one configuration or another. But the desirability of the State becoming 'the nipple of the nation' is as desirable as the caricature of ministers' of state having all the imperious bearing and grandeur of heads' of minor African states.

The scrapping of the public sector levy is proposed as well as ‘fundamental tax reform’. This might sound attractive to individuals like me who are subject to this levy. However, there is not as much as a single mention of how wealth based on real productivity might be created and rewarded. How can government expenditure be funded if there is no underlying wealth created to sustain it? Too much of Ireland’s wealth has been attributable to a false premise, specifically, the appreciation of property values at a breathless rate the consequences of which are now almost bankrupting the country. This was made possible by banks lending to people they should not have lent to and and borrowers who didn't have the means of repaying the capital borrowed and the associated interest. It has even been disclosed that the fund that provides welfare support will run out of resources by next year. This is funded by PRSI remittances.

Sinn Féin speak of ‘balanced public spending’ and ‘sensible borrowing’. What does this really mean? What borrowing ceiling is envisaged given prevailing economic circumstances and increased levels of State debt? Who will provide this money and at what cost? How credible a borrower would a government containing a Sinn Féin component have with potential lenders and those whose influence potential lenders heed?

Sinn Féin want to ensure that bank credit becomes available to sustain small and medium-sizd businesses. But in a world credit system that migrated from being dysfunctional to non-functioning and consumers have simply stopped spending, how is this to be accomplis

Job retention and job creation are mentioned. A job creation plan, detailed cost proposals and targets do not in themselves stimulate employment. They have as much potency as a bishop's apology for the deeds of a paedophile priest. Plans and targets merely offer incidental context that may, or may not, be relevant or useful. Furthermore, if the jobs’ ambition is merely on the 164,952 jobs that have been lost to date it could mean that the thousands of job losses that are sadly pending are not factored into the School of Candyfloss Economics policies. What will the the source of the anticipated jobs?

The suggestion that borrowing should be for strategic investment and be time-limited probably ought to be described in the first paragraph of Economics for Greenhorns. Who ever heard of a lender offering loans that are not ‘time limited’?

Why would Sinn Féin wish to ‘stop illegal evictions’? Illegal evictions are derring-do of neighbourhood mobs so perhaps they intend to resist their own racketeer or mobster elements.

Ending tax shelters, ending tax exile status, the overhaul of tax reliefs and the avoidance of tax evasion by the wealthy are awesome ideas but not exactly original or practical. Given that we live in a free society with guarantees of freedom of movement, how would Sinn Féin respond if all the categories they seek to impose greater tax burden on simply move out of this jurisdiction? The sandpit could empty very quickly and there would be nobody left to play with the train set.

I think that Sinn Féin have a great deal of political growing up to do in this Republic before they convincingly persuade those outside their core supporters that they offer a credibile, competent dynamic alternative governing option. They also need to escape the chains of their rhetoric and realise that empty shibboleths do not convince those who seek genuine and potentially sustainable change. The votes of floating voters are hard earned. All political parties need to convince a sceptical and distressed electorate that their ideas to restore competitiveness in Ireland are credibile and that productive wealth can be generated and rewarded. When that has been done it would then be time to cost and prioritise the initiatives that will lead to the type of society that each of them dream about.!

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