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Brendan Keenan: Gerry's confusion is most illuminating

GERRY Adams may have done the State some service. The thoughtless comments from his party about leaving the EU and IMF, and his own inability to explain what this might mean, had the surprising consequence of clarifying the debate in a way that all kinds of expert commentary has not.

Experts often know too much to be able to make themselves clear. Even when they can get their message across, it is often to disagree with another expert -- certainly where the economy is concerned. So people get more confused, not less, and more depressed.

Despite the understandable confusion, the reaction to the Sinn Fein/Adams difficulties suggests that people understand more than they might even give themselves credit for.

Suddenly, everyone seemed agreed that the EU/ IMF rescue funds saved us from unimaginable disaster. Also, that such rescues are not done out of the goodness of the rescuers' hearts, but from their own self-interest. There is a price to pay, and the borrower's freedom of action in such circumstances is limited.

I found this reaction intriguing. It is essentially the argument made by the departing Government -- a poor shambolic thing by the end, with the communication skills of a jellyfish.

Yet the argument seems to have got through. In the circumstances, this can only be because it accords with people's instincts. Those instincts rejected more sophisticated versions of the Sinn Fein idea, made by people who really do know what they are talking about.

Economists will point out that the instincts of lay people may often be wrong in such weighty matters. From competition policy to taxation, the views of the theorists often go against common sense. History suggests, though, that common sense turns out to be right at least as often as the theory.

The arguments are valid. It is true that the Government could have dealt with the crash in very different ways than the ones it chose. There were alternatives to the blanket bank guarantee. There were other ways to deal with bank losses than setting up Nama.

But whatever route they chose, the banks would still have been insolvent. The public finances would still be a wreck. Things might be a bit better if other policies had been adopted, but fundamentally they would be much the same.

The difficulty with the swirl of argument is that too little of it has been in the context of the world as it really is. The debate is full of versions of the Kerryman who wouldn't start from here, and whose advice is therefore of little use.

Ireland is a member of the EU, and a member of the eurozone. Unless one starts from there, the argument is imaginary.

For one thing, membership requires member states to act in the collective interest. Of course they try not to do so, if they can get away with it -- but, when the chips are down, it is an obligation which can be pressed upon them. I have no doubt it was pressed upon Ireland.

Advocates of unilateral action, who would spurn the rules of the game in our dire situation, have to show that doing so would be more in the national interest than playing the game as best one can. They have tried, and tried manfully, but last week's debate suggests they have not succeeded.

Another thing that economists know is that people dislike risk more than they value possible gain. In this instance, they have clung to the world they inhabit, rather than venture into the unknown territory of changing that world into something different.

In this, they are at one with the Government -- this government, the next one, or any conceivable one. Governments are cautious, conservative institutions. They do not, as a rule, engage in radical, risky or revolutionary activities. At least, not deliberately.

The depth of the crisis is forcing European governments to abandon caution and enter unknown territory. The risks are so high that no one can step out of line. They must hang together, or they will surely hang separately.

As the IMF said last week, the euro crisis could set off a second global crash as bad, or worse, than that of 2008. It is fantasy to think any small country will be permitted to add to that risk by acting alone.

For good or ill, the decisions on what to do about the Irish situation will be made collectively. The room for manoeuvre on our part will be very small. All we can do is decide where we want to stand in that narrow confine. There can be arguments, up to a point, over the pace and cost of the austerity programme. There may be possible tradeoffs, none of them pleasant, between fiscal harmonisation and tax harmonisation.

At home, we are free to decide on the balance between taxes and spending, but in reality only at the margins. And that's about it, really.

Sunday Indo Business