Sir, – While Gerard Howlin may be overstating the case (“Chasing inflation with a huge pay rise for the public sector is understandable but insane”, Opinion & Analysis, June 18th), his warnings should nonetheless be heeded.
As in the 1980s and again in the late 2000s, it seems to be the political imperative to claim, or at least to not refute, that the resolution of every problem can be solved by throwing public money at it, including the recent rise in the cost of living. The reality is that a bigger share of incomes must be paid out now for the same imported energy, either directly or indirectly, largely because of the war in Ukraine.
There is nothing we can do about this. Except, if we wish, to protect those most affected, by taxing those least affected. Increasing overall wages, not related to productivity increases, to “compensate” will simply lead to domestically induced price rises. Rendering the country uncompetitive and hence leading eventually to much greater economic problems. That reality needs to be realised and accepted by all politicians if they are being honest with the electorate. – Yours, etc,
JOHN O’HAGAN,
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Department of Economics,
Trinity College Dublin,
Dublin 2.
