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Marc Coleman: We may look like chumps but we should still vote Yes

From polar opposites, Eamon O Cuiv and Patrick Honohan last week provided us all with the chance to turn the fiscal referendum debate from a tawdry political squabble into what it should be: a serious debate.

At home and abroad the argument is hotting up. And the stakes are getting higher: despite rejecting their bailout on Sunday, Greek voters were rewarded for this with another €5.2bn in EU funding. For its failure, Spain may also be rewarded with a restructuring of its bailout. As if that wasn't enough, the nation that gave us the treaty, Germany, has now delayed its ratification. To some, it looks like Ireland is the chump nation of Europe.

But there is still a strong case for voting Yes. As he explained his travails with his party last week, Eamon O Cuiv compared himself to Desmond O'Malley. The comparison was a little flattering given that O'Malley broke with Fianna Fail in 1985 when Charles Haughey opposed plans to liberalise contraception. Asked if he was doing so to please more "progressive" opinion in Europe, O'Malley replied that he was not supporting the measure for the good of Europe but for the good of the Irish people.

So our EU partners are cooling on the fiscal compact? But should we vote "No" to spite them or "Yes" in spite of them? Or put it another way: can we look our children in the eye and tell them that we left a debt/GDP ratio of 120 per cent for them to shoulder because the EU pissed us off?

My view of an argument advanced by Paul Krugman is that it says we can crush our children by passing on our debts. At home, less intelligent voices than Krugman's -- such as Kieran Allen -- agree.

On Wednesday's Pat Kenny show Allen praised Obama for rejecting "extreme right-wing" austerity. But tax cuts aside, Obama and the Democratic Senate's doubling of US debt in the last few years is driving America towards a Greek-style collapse. As a socialist, the collapse of capitalism would be an occasion of profound joy to Allen and his adherents, several of whom are highly paid academics. For we who live in the real world -- we whose taxes fund those salaries, secure jobs and pensions -- another debt explosion and the complete collapse of market capitalism mightn't be so joyous.

As Patrick Honohan put it on Tuesday: "If there's any European government that doesn't need any more debt, it's the Greek one."

The same logic applies to Ireland and Europe generally. The choice isn't between austerity or growth, but between pro-growth austerity and anti-austerity growth. Germany's 7 per cent unemployment rate is the result of austerity that cuts waste and overpay, avoiding tax increases and reforming markets. Spanish, Greek and Italian unemployment rates of over 20 per cent are the result of exactly the reverse kind of austerity. We are somewhere in between. Aided by vested interests who want to protect wasteful spending, some on the left are providing a pseudo-intellectual case for voting "No". A case the media is doing too little to challenge.

But there were, until Tuesday at least, reasonable voices on the "No" side. And although now silenced, Eamon O Cuiv has made a huge contribution to the debate and one that may help the economy and the "Yes" side. In a debate on April 5 last, O Cuiv, unlike Allen, accepted the premise of debt reduction but argued that there was a tactical reason for voting "No" to do with "wider issues to be examined before we commit ourselves to the consequences and the effects of this treaty"; namely the promissory note. A "No" would, he said, send a cry for help that could get "the best deal for Ireland". Although I disagreed with him, the Greeks last week received €5.2bn after crying for help.

At the very least, O Cuiv has got a rational debate going. Patrick Honohan carried the debate forward by answering some of the questions O Cuiv posed at the start of it: the bank guarantee was, he said, "rash and over broad" and our debt sustainability would be "much less of a concern" to ratings agencies if Europe shouldered some of bank recapitalisation burden.

Member states should not, Honohan added, face the responsibility of guaranteeing bondholders "in order to protect the functioning of the bank bond market in other countries". Ditto O Cuiv.

Of course O Cuiv was derided as a national saboteur by the Dublin 4 commentariat while Honohan received coos of approval, a stark reminder of the other big story last week: the laying bare by the Broadcasting Authority of Ireland report into the Father Reynolds affair of the Dublin 4 media's disgraceful groupthink. The Dublin 4 media is as biased against O Cuiv's West of Ireland accent as it is against anyone in a dog collar. But groupthink arrogance is as big a turn-off on the "Yes" side as Kieran Allen's economics is on the "No" side.

Unfortunately for Government, the groupthink groupies outnumber the Kieran Allen brigade. Fortunately there are sound, sensible people like Simon Coveney, Barry O'Leary and Patrick Honohan to put the "Yes" case respectfully and sensitively. These are voices we need to hear. And if Honohan can convince his ECB colleagues, we might get a break on the promissory note, and a "Yes" vote on May 31.

Marc Coleman presents 'Coleman at Large' each Tuesday and Wednesday from 10pm on Newstalk 106-108fm.

Sunday Independent