Friday 26 May 2017

Lukewarm government is a recipe for disaster

Ideological differences between coalition partners can paralyse decision making, writes Marc Coleman

IT didn't work for the banking system. And it won't work for the next government either. However enticing for the pundits, the "too big to fail argument" is as much a recipe for political disaster as it was for dealing with the global banking crisis. The argument is based on the "size matters" premise. "Our crisis is so deep," so it goes, "that a government with a big, strong majority is needed to steer the country through it."

But it's an argument that flies in the face of two things. The first is hard experience from living memory. The second is international research from the world's leading political economists on which kinds of government do best when faced with debt crises. The conclusion of both is very clear: be hot or be cold, but lukewarm governments are a recipe for disaster.

Not that we really need research to prove what anyone over 35 already knows: that the last time Ireland had a crisis approaching this magnitude -- the Eighties -- the solution had nothing to do with the size of the government's majority.

Honourable and well-intentioned, a majority Fine Gael/Labour coalition grappled between November 1982 and February 1987 with public debt levels similar to those we face now, only to be paralysed by deep differences and arguments. It made limited progress, but ultimately failed.

Far from a majority, the government that did pull us out of the mire had a minority. But between 1987 and 1989, that Fianna Fail government was backed by a responsible and -- on dealing with the economic crisis -- like-minded Fine Gael party led by Alan Dukes. The arrangement, the "Tallaght Strategy", worked because both parties shared a similar outlook on the crisis.

But what the incoming government must do for at least two years will be anathema to the Labour Party. A reverse Tallaght -- Fine Gael in government, backed by Fianna Fail in opposition -- would be unpleasant for many voters to contemplate. But which is more important: respecting tender consciences, or making sure our children can work in their own country?

This election proves that the electorate no longer care about civil war sensibilities. Left or Right, they want a government that works. And, for better or worse, they have chosen right over left, with two-thirds of voters rejecting the left.

The point being made here is not against the Labour Party. Had Labour beaten Fine Gael into second place, this column would be arguing for the next government to be based on that left-wing majority. But, of all the mainstream parties contesting this election, no two parties are more ideologically opposed than Fine Gael and Labour. As Kathleen Lynch's attack on Lucinda Creighton shows, their voters are deeply divided on social issues as well.

Leading international research tells us that this bodes ill for a Fine Gael/ Labour coalition. In 1998, a paper (The Political Economy of Fiscal Consolidation) written by three of the world's top political economists -- Alberto Alesina, Roberto Perotti, and Jose Tavares -- and published in the prestigious Brookings papers on economics, showed that in times of crisis coalitions fail to reduce public debt, particularly if they are centrist coalitions.

A strong left-wing government will raise taxes. A strong right-wing government will cut spending. But a centrist government will agonise over what to do, and do nothing. And that is just "centrist" centrist governments -- ie, single- party governments made up of a middle-of-the-road party. When a government's centre of gravity is centrist because it is made up of coalition parties of right and left cancelling each other out, things get even worse.

Ten years before, in 1988, Alberto Alesina had shown in a paper for the National Bureau of Economic Research (External Debt, Capital Flight and Policy Risk) how ideological differences within a coalition government can paralyse decision making.

Many economic writers agree with this. What's more, they note how the problem is made even worse by something very relevant to Ireland: our volatile electoral system.

At a recent National Forum meeting, a former Fianna Fail TD told a story about a conversation he'd had with a UK MP, Jeff Ennis, with whom he struck up a friendship. Com-

paring the size of their majorities, Jim noted that he had won his seat by 270 votes over the nearest rival, while Jeff's majority was a staggering 27,000. Pretty much all experts agree that the easier it is for government representatives to lose their seats, the more policy paralysis there is in government. This problem affects all governments in Ireland. But, as the Eighties showed, it greatly accentuates ideological tensions in government against the backdrop of an economic crisis. And there is a mortal difference between the political situation facing a Fine Gael/Labour coalition now and that facing the coalition of the Eighties: the already large differences will be widened, as Fine Gael is put under pressure from Independents on its right flank while Labour faces severe pressure on its left flank from both Sinn Fein and the United Left Alliance.

Let's be very clear, these findings do not suggest that the Labour Party is worse or better than Fine Gael. If anything, prospective Labour ministers are more experienced and at least as technically able as their Fine Gael counterparts. And although -- to be transparent -- I should say that my view is that Fine Gael policies are closer to what is needed now, that is not the point.

The point being made here is that the next government should be clear on what it is about. Basing a mandate on the two parties who argued the loudest about what needs to be done does not inspire confidence. Go left, or right, but for God's sake make a decision and stick to it.

Perhaps when votes are counted Fine Gael will be able to get a majority with reliable like-minded Independents. Or -- as Garret FitzGerald accepted on my show last Wednesday evening -- the Tallaght Strategy precedent might be used to steer the country through the next critical two years. Both he and I agree that such an arrangement should not last for a full five-year term. But it could break the back of our crisis, giving Labour a fair chance to lead a left-led government in 2013. A government, it might be added, that would then have a better chance of implementing its agenda.

Next Thursday, Alan Dukes and Ray MacSharry will address a meeting of the National Forum. If by then a Fine Gael/Labour government has been formed, so be it. But Labour and Fine Gael should at least listen to what both men have to say before making decisions that they -- and, more so, the country -- will bitterly regret.

Marc Coleman presents 'Coleman at Large' on Newstalk 106-108fm each Tuesday and Wednesday from 10pm, and chairs the National Forum; www.nationalforum.ie

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