Saturday 16 November 2019

Stephen Kinsella: Let's start debunking our national fiction and tell the real story

WHAT is it about our public discourse that invites such a uniform set of views on issues of national importance?

After the Budget, with the Irish people naturally focused on the effects €3.5bn of spending cuts and taxation increases will have on their lives, asking why we publicly tend to collapse on a single view of events might seem like a waste of time. But it isn't, because of the powerful role of narrative in our public debate and the manner in which the narrative shapes the outcome of that debate.

Let me give you an example.

Greece is in trouble, because the Greeks are lazy, tax-dodging spongers who allowed their government to borrow and spend during the boom rather than increasing productivity. The policy solution to this story? Cut spending, tax more, make the Greeks work harder. It's a pretty nice story with some truth to it.

Trouble is, the Greeks aren't lazy. As measured by the OECD, Greeks actually work more hours than the Germans or the Irish. Only Koreans work more hours. The tax take in Greece is almost sufficient to cover its primary balance, not including its debt. The real problem in Greece is too much sovereign debt, and so the solution is a default. The wrong narrative, spun because it suits powerful interests, leads to the wrong policy conclusion.

Here's another example, this time an Irish one. We all partied. Of course there's evidence for the story. Those in power point us to the huge increases in private borrowing, facilitated by the banks, which now need to be repaid by the taxpayer. Selling the "we all partied" narrative leads directly to the policy of austerity, and suddenly, without too many jumps in between, we are cutting child benefit.

Now child benefit did increase massively over the boom years. It makes sense to try to reduce the €2.1bn expenditure. But an across-the-board cut is bonkers, because it is purely regressive. I'm a mid-ranking public servant with three kids. I can absorb the cut. Someone with a lower income, who spends most of that income, is going to find that cut much harder to bear.

Make the child benefit payment part of taxable income and increase the means-tested family income supplement, at once reducing the cost to the Exchequer and targeting more money to those who need it. Can you see where the cuts are driven by the narrative?

Here's another narrative. Regulators failed to police banks who lent money like drunken bookies cheered on by gombeen politicians to financially illiterate households.

The solution isn't austerity for those at the bottom, it's jail time for those at the top; austerity first for those left at the top, and then austerity for the remainder to balance the books.

The exact reverse has happened in Ireland. Those at the top will not have their incomes or wealth damaged to any great degree, while proportionally, those at the bottom will suffer. Because, they say, we all partied. Rubbish. The facts don't allow the narrative to exist. Here's a final example. At long last, Ireland is beginning to move beyond its construction boom and bust. Ireland's largest banks can borrow again on the open market. The interest rates on Ireland's sovereign bonds – seen as key indicators of the probability of default – are falling rapidly. Ratings agencies have upgraded their outlooks on the plucky little country and some of its banks.

The turnaround is nearly complete and last summer the Government held two successful sovereign bond auctions, and plan many more for the next year. By late 2013 or early 2014, Ireland should no longer need the assistance from the EU and the International Monetary Fund.

I don't need to debunk that one. Just look around you. How do we disrupt the consensus view that generates a narrative like this? Firstly, by relying on the facts. Look at graphs and tables produced by the organs of the State and the international agencies. They aren't hard to understand, and they are freely available. Secondly, encourage a diversity of viewpoints on radio, TV, and online by complaining when you don't see or hear them.

Third, legislate for diversity – I don't just mean gender equality, but rather cultural and socioeconomic diversity as well. I suppose it comes down to this: if we allow the same stories to be told then we deserve the consequences. We could change the dominant narrative by challenging it. This would make policymakers' jobs harder, but we wouldn't mind that too much, would we?

Irish Independent

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