WE considered presenting both sides of the austerity debate today but, to be honest, we had a bit of trouble thinking of anyone, apart from the Government, who thinks austerity is a good idea.
Even the people who are enforcing austerity, people like the IMF, don't actually believe in it anymore. The IMF have gone so far as to admit they got it drastically wrong. "Activity has disappointed in a number of economies undertaking fiscal consolidation," they admitted recently. "Negative short-term effects of fiscal cutbacks have been larger than expected."
In fact, it turns out that the traditional multiplier applied to the effects of austerity on an economy has been wildly wrong. Since the beginning of the crisis the negative effects of austerity on economic output have been up to three times what the IMF thought they would be. They were operating under the assumption that for every euro cut from government spending a country's output would fall by 50c. In fact the case has proven to be that for every euro cut from spending, 90c to €1.70 is wiped off output. It was a huge miscalculation, and the observed outcomes of austerity have actually led to Christine Lagarde becoming one of the leading anti-austerity campaigners on the European scene.
But it is not just that the economics of austerity have been proven to be wildly wrong. Underneath all economics is an unpredictable irrational beast called the human being. And unfortunately nothing can work without these beasts. And when you scare them, and you cut back on them, they cut back even more, and before you know it you are into a vicious downward spiral.
The problem with human beings too is that they are only human. And even if you convince them rationally that cutbacks are needed, there is only so much they can take. The results of today's Sunday Independent Milward Brown National opinion poll show a people punch drunk from austerity and unsure how much more they can take. And that's even before they are hit with another austerity budget next week.
A staggering 56 per cent of people believe this Budget will be a step too far for them. This suggests that over half the population believe this Budget could push them, or the country, over the edge. Over half of those who expressed an opinion one way or another said the Budget will affect their Christmas. Given that the Irish are noted as, and have been proven to be, people who put the best foot forward for Christmas regardless of anything, that's a bit depressing.
People are worried too. Over half of Irish people are worried about their standard of living and two-thirds of people with kids are worried about their standard of living. More than two-thirds of people with kids worry about paying household bills. Over half the population do.
No huge surprises there, you might say. But perhaps the most damning finding in today's poll is that the people see no end to it. Half the population believe there is no light at the end of the tunnel. As we face our sixth austerity budget, 48 per cent believe we will see four to five years or more of them. And that really is the crux of the problem of where we are at now.
We have endured four, maybe five years of misery already in this country. In the post-war period recessions have tended to last six months to a year-and-a-half, an average of about a year. We have now had our heads down for four times that at least, and half of us think it's going to be another four years or more. As if this is just how we are now. This is how we live. There are people who think this is how it will be for the rest of their lives. There are people out there who believe they will never see good times again. You could go so far as to say that the prolonged nature of this downturn has changed us as a people. It has actually got into us and altered our personality, our essential character. And now half of us have trouble seeing how things can be any other way. There is, for half of us, nothing to look forward to anymore, not even Christmas.
And that's when people give up, when they see no point in it all, when austerity and cuts just seem to become an end in themselves. You need to bring people along with you. You need to get them to feel that it is all going somewhere, somewhere better, that there will be some reward. But clearly, the people don't believe. And if the people don't believe, they won't bear any more of it.
And furthermore, for Noonan to ask people to bear this while he refuses to deal with the issue of massive pensions for the bankers and senior civil servants who destroyed the country and helped put us in this mess, is a bridge too far. For all the current crowd say about poor old Brian Lenihan, at least he had the balls to deal with bankers' bonuses, and crucially, he understood too that in order to expect everyone else to take pain, he had to be seen to deal with bonuses. Is Noonan too old and too tired from trotting around the world to act on the pension issue or, worse, does he not have a nose for the public mood? Does he think people don't get it? People get it alright. And what's more, they get the bigger picture.
People are educated enough to know that barely any economist agrees with austerity. People are educated enough to know that there is no example in history of austerity working. And this time is no exception.
On Friday, we learnt that unemployment in Europe is now at a record high – 11.7 per cent. Millions of people across the continent are unemployed, partially as a result of austerity measures that are choking economies. In Spain and Greece, 25 per cent of the population are out of work and nearly 60 per cent of young people are. So there are more unemployed young people in Spain and Greece than there are young people with jobs. That's not a stable equation.
And in the US, where they didn't do austerity, admittedly because the financial markets didn't force it on them, things are looking good. Even as they look at tackling the deficit they are painstakingly aware that, As Alice Rivlin of the US Congress's Budget Office put it bluntly a couple of weeks ago, "austerity is not a good prescription for weak economies". And it doesn't even work for debt sustainability either.
The Yanks look over here and they see that even after all the cutting and all the pain, debt-to-GDP ratios aren't getting much better because, even as debt is being cut, GDP is collapsing too because of austerity.
We all understand that we cannot live beyond our means forever. We all understand that we need to cut deficits. But not now when the economy can't take it.
And now, as they look for more ways to tax us, they're going to start taking money from people for the privilege of owning a home, already a liability to so many. It seems as if they are determined to find people's tipping point. Let's hope, for their sake, that they don't find it on Wednesday. Just because people haven't rioted yet, doesn't mean it'll never happen.