Sir, - Arising out of the controversy surrounding the claims by Brendan Walsh and other economists that tax cuts will damage the economy, as surveyed by Dick Walsh (June 14th), a number of points could usefully be made.
The public pronouncements of academic economists often provoke fury in many quarters, but their specific claims are seldom subjected to rigorous scrutiny. Instead, there is an attempt to side-step the details of the argument by claiming that ideologically blinkered academics are divorced from the real world. This may be an effective manoeuvre for politicians to make in debate, but it creates its own problems.
For instance, on RTE's Question and Answers recently, Professor Walsh's colleague, Moore McDowell, was quite happy to leave issues of equity and social justice to Pat Rabbitte. Rabbitte's case was, that in the context of an unprecedented economic boom, ordinary working people, who have put up with austerity for years, would totally reject the proposal to forego tax cuts. This sort of debate reinforces the belief that we can either have equity or efficiency, but not both. It also gives the impression that politicians and economists are engaged in a dialogue of the deaf.
All this underlines the fact that the proponents of change are fighting with one hand tied behind their backs. There is a powerful case to be made in terms of fairness, equality and distributive justice. But unless the economic terrain is contested only half the battle is being waged.
I believe that the process of Social Partnership is the correct means to pursue social and economic goals. The question is how to promote a vision of social justice that is grounded in economic reality.
Professor Walsh may well be correct in his view that the economy will overheat if there are to be tax cuts and no other alterations made to the public policy landscape. If that view gains ground among, say, bankers, market makers, Department of Finance officials and maybe Mr. McCreevy himself, it won't easily be shifted by mere pleas based on some notion of fairness. It is a certainty that Professor Walsh's views will not be successfully rebutted simply by ditching economic arguments in favour of ethical ones.
I would like to see some well thought out proposals that address low pay, poverty and employment traps. It is at least conceivable that a realistic minimum wage and a starting tax rate of 10 per cent may put tens of thousands of people off the dole and Community Employment schemes and into real jobs. Property targeted tax cuts do not necessarily mean a flood of imported BMWs and other forms of conspicuous consumption by the wealthy.
The broad Left generally supports Social Partnership, although many are uneasy about its relatively negligible impact on poverty, inequality and long term unemployment. If Labour and Democratic Left are considering some kind of new political formation, they should attend to the problem of the lack of creative economic thinking. Party negotiations should consider setting up some kind of machinery which would produce properly grounded economic policy. Only then can the Left take on the views of the mainstream economists they so revile.
This might go some way towards reversing the historic weakness of Left political discourse, which has relied too much on ethics and not enough on economics. Pleas for fairness and ad hominem arguments simply won't do. - Yours, etc., Gerry O'Quigley,
Bray,
Co. Wicklow.