Saturday 17 March 2018

Marc Coleman: Think-tank mustn't cheer for tax hikes

The ESRI often gets its forecasts right, but it is wide of the mark on the public sector

BRAVE: Alan Barrett conducted ground-breaking research
BRAVE: Alan Barrett conducted ground-breaking research
Danny McCoy: advocates tax cuts
Marc Coleman

Marc Coleman

'As an advice-giving profession, we are in way over our heads." Whenever State-funded economists argue for higher taxes, this charmingly honest quotation from John Maynard Keynes should be always thrown back at them.

Now many of Keynes's devotees work in the Economic and Social Research Institute (ESRI). And in fairness to that body, it has held its head above water for much of its forecasting and commentary on the economy. In 1994 it predicted the Celtic Tiger. And – if mutedly – warned of the coming global crash in 2006. But when it steps outside its comfort zone, the results are rarely good.

An exception to this is Professor Alan Barrett's ground-breaking research on public private-pay differentials in 2009. Before the Croke Park deal prevented them a year later, this helped the government to make some inroads into excessive pay and pensions and avoid tax hikes. The result was a weak but brief recovery in 2010 (which was quickly overturned by the Croke Park deal and bailout debacles).

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