| 7.5°C Dublin

Thomas Molloy: Dazzling economist whose legacy still shaping the State

GARRET FitzGerald is often regarded as the only economist to run the country. The truth is that he was a self-taught economic expert who forced himself to understand the national accounts while remaining true to his first loves, which were foreign affairs and social progress.

FitzGerald wrote about economic matters as a journalist before and after his political career and also lectured briefly in UCD, but the French and history student's upbringing, training and interests were dominated by foreign affairs -- the portfolio that his father also held.

While his diplomatic success secured him international acclaim during his lifetime and a place in the history books, it rarely cut much ice with voters, who tended to be concerned with bread-and-butter issues such as the economy. So how did he perform in his adopted field?

It was FitzGerald's misfortune that he inherited an economy that had been trashed by Fianna Fail so badly that the Fine Gael man's Herculean efforts to restore the country's finances overshadowed his other achievements -- at least for those who lived through the dark days of the 1980s.

While a liberal in many respects, his economic policies tended towards the pragmatic and remain hard to categorise to this day. There was no equivalent of Thatcherism, no coherent set of beliefs that challenged the 1970s consensus with the new free-market consensus of the 1980s. While he cut spending where he could, one of his proudest boasts was that he managed to maintain the dole during the 1980s while also introducing child benefit to replace the children's allowance.

While there was little ideology, FitzGerald's legacy is still shaping the State in interesting ways. His consistent championing of the young means that his protegees are guiding modern Ireland as we tackle a similar debt crisis to the one he inherited. FitzGerald's economic adviser, Patrick Honohan, is now governor of the Central Bank. His agriculture minister, Alan Dukes, is chairman of Anglo Irish Bank, while his finance minister, John Bruton, is the man employed to inject new life into the International Financial Services Centre.

FitzGerald took power for the first time in 1981 following campaign pledges to cut taxes. Those promises were economically illiterate and broken just a few months later in a supplementary budget. Spending rose 14.5pc that year; a bad result until one considers that it rose 23pc the following year when Haughey returned to power. Judged by conventional metrics, FitzGerald failed -- but he undoubtedly helped to set the terms of the debate.

FitzGerald's economic record hinges on his second and last administration, which lasted from November 1982 to February 1987. Critics, including Fine Gael's Leo Varadkar, highlight the fact that government borrowing doubled from £14.8bn to £30.1bn and suggest that FitzGerald failed to follow his own prescriptions. The truth, as usual, is more complex. The national debt doubled but at a time when interest rates were in double digits, which meant that the debt pile would have increased by around 60pc even if FitzGerald had not borrowed another penny. In an era of high interest rates; debts quickly run out of control even if the debtor does nothing -- something that anybody with credit card debt knows too well.

This is not to say the popular version of history is wrong. In his autobiography, FitzGerald wrote he had been too concerned about the deflationary effects of spending cuts. These concerns made him too slow to trim services back to the bone.

In retrospect, it was only his final budget, presented in late 1986, that grasped the nettle and finally instituted the cuts that began to put the country's finances back on a sustainable footing. As the government fell shortly afterwards in an election dominated by anger over those cuts, it was Charlie Haughey and Ray MacSharry who eventually put much of the plan into operation and got the credit for the economy's recovery, but there is no doubting FitzGerald's contribution.

It is perhaps only now, as we sit in the midst of another recession, that we can properly judge his legacy. This time around, there are no easy answers -- just as there were none in the 1980s. In both cases, debt spiralled out of control despite severe cuts that push up unemployment.

Perhaps FitzGerald's greatest achievement is that he tackled the economy while leading a crusade for social change and reinventing our once poisonous relationship with our nearest neighbour. He was a dazzling amateur economist who always understood that lack of funds was no reason not to aim for the stars.

Irish Independent