Saturday 20 July 2019

Stephen Kinsella: Hearings show how democracy works, so let's have more of it

The process of selecting officials in ancient Greece was called sortition. All citizens – men of course – were eligible for elected office. Effectively, the citizens drew lots for ministries (the one with the shortest straw probably became minister for health).

This 6th Century lottery-style choice of government meant that although tribes did exist in Athens, no parties could form, no 'insider' deals could be done, and no one could become a professional politician.

Lasting influence came either from military victories – meaning you put your life on the line as a soldier – or vast wealth, which was useless in helping to attain power but helped you gain influence elsewhere.

Aristotle wrote that true democracy only came from such random selection between equals. He felt elections only encouraged oligarchy, where power ends up in the hands of a small number of people. The problem with oligarchy is simple, and it is not too much power, nor the oligarchs becoming self-serving. The problem with all oligarchies is their inability to process information.

Readers will be aware that the Government's Economic Management Council was effectively where the last Budget was decided, where a regressive measure like the cut in child benefit was decided on rather than a progressive hike in taxation for those earning more than €100,000 per year. These decisions were presented to the Cabinet for signature as done deals.

The council's decision-making members are Enda Kenny, Eamon Gilmore, Michael Noonan and Brendan Howlin, supported by five senior officials and two political advisers.

The council has responsibility for overseeing government policy on budgetary matters, but also the EU/IMF bailout, the mortgage arrears crisis, restructuring the banking system, the Government's stance on Europe, and the legacy issues around banking debt, including the promissory notes.

In short, the Government's Economic Management Council makes decisions on everything important for this country. It meets almost weekly and is, in effect, the core of the Government.

We have huge decisions being made by a small number of people, all of whom are career politicians. The last government was plagued by a series of decisions made by a very small number of people. We may yet see the same pattern emerging in the current Government.

Ireland already has a democratic deficit when it comes to cabinet ministers, who are far more powerful than their counterparts in other countries. The Economic Management Council, by setting spending limits and deciding policy, effectively reduces even cabinet ministers to lobbyists for their own departments.

Even on budgetary matters, the issues involved are highly complex, and yet the decisions made on spending and taxation reflect the minimum set of acceptable bargains these four people arrive at, rather than the right policy mix for the country as a whole.

The issue is information processing. How can four people, even four very intelligent, very well-informed people, possibly work out the right strategy for the country?

In other EU member states, the budgetary process is open, with the government publicly considering options on spending and taxation months in advance of the actual budget being delivered to be voted through, giving a more balanced and considered outcome and reducing uncertainty. This allows the public and policymakers inputs into the process, encouraging meaningful debate.

In the Irish case, we have a few weeks of kite-flying in the media and a big bang speech in early December. This was never satisfactory, and now, in the era of fiscal rules, EU Commission budgetary oversight, and medium-term budgetary frameworks, seems an anachronism.

We have seen three days of considered, respectful and expert testimony within our parliament on the issues surrounding abortion. As a member of the public who listened to those submissions, I now understand those issues far more than I had before. Surely we can replicate these hearings –their tone, their scope, and their remit – annually with respect to our budgetary processes?

Those inside the council have no incentive to give up their membership. Doing so would dilute their power. Expanding the membership in any direction would provoke a cabinet turf war. The council is here to stay, and in its current form.

The upside of the council is the increased co-ordination of economic policies it brings. Everyone is singing from the same hymn sheet when it comes to policy, because it is handed down from the leaders of both parties and the finance ministers.

That is a good thing. The downside risk the council runs is making a historically bad decision, like the bank guarantee, or failing to implement key investment policies, or even fulfilling simple promises like not burning bondholders, not forcing the resignations of top bankers, not increasing funding for labour market activation programmes to reduce unemployment, not touching child benefit.

The Economic Management Council has the potential to make a mockery of our already compromised democracy. Its importance means we should push for transparency – another promise of this Government – with respect to its activities. We don't even know what these four people – all men – discuss, let alone what they decide on our behalf. I wonder what the Athenians would make of it?

Stephen Kinsella is a lecturer in economics at University of Limerick

Irish Independent

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