Monday 5 December 2016

Fragility of minority Government has shortened the political time-horizon

Short-termism in politics works in good times but can lead to an unwillingness to make hard strategic choices

Published 23/10/2016 | 02:30

The provision of liquidity is in the hands of a foreign central bank, in our case the ECB in Frankfurt.
The provision of liquidity is in the hands of a foreign central bank, in our case the ECB in Frankfurt.

Political decision-making in democracies has a bias towards the short term: decision-makers are temporary hires and will not be around to reap what they sow. Electorates seem almost to prefer their political leaders employed on short contracts. In good times this may not matter too much: politics reduces to the distribution of any available gains from economic growth. But when difficult strategic decisions are required they are routinely dodged and the inevitability of hard choices denied.

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This tendency is exaggerated by the 24-hour news cycle and in Ireland the fragility of the minority Government has further shortened the political time-horizon. Some serious threats to Ireland's longer-term prospects have arisen recently and are not being addressed. Meanwhile, the media circus which attends government and politics like the baggage-train of a medieval court obsesses about matters of no enduring importance.

The recent budget enshrines an expectation that the constraint of an overburdened national Exchequer will somehow take care of itself. Britain's decision to depart the European Union and the subsequent sharp decline in sterling have led only to fatuous demands that the Government should 'Brexit-proof' the entire economy, something beyond the capacity of any government. The corporation tax regime, the unique selling point of Ireland's inward investment model for more than half a century, is under sustained attack without, thus far, any evidence of a coherent response.

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