Thursday 18 July 2019

The democratic centre needs to combat populist lies

Finance Minister Michael Noonan
Finance Minister Michael Noonan

Brian Hayes

Political stability should never be taken for granted. When politics goes pear-shaped, frequently the economy is next to follow. That was the central message from Minister for Finance Michael Noonan this week. His message was timely and appealed directly to middle Ireland.

Yes, in 12 months a lot has changed in politics. Twelve months ago, the public's verdict on the Government was one of begrudging satisfaction. Well that's gone now and the Government has to fight back to regain the initiative and shape the narrative between now the general election.

At an economic level, the last 12 months have been the best 12 months for the country since 2008. Politically, however, it has been the worst year for the Government since early 2011. Yes, the Government has made mistakes in 2014 and has paid a heavy price for these mistakes. But is the state of the parties down to mistakes alone? I think it's much more complex than that.

Despite all the talk about people understanding why we got into this crisis, there is still little acceptance that our economic and financial crisis was largely home-grown. People actually believe that austerity was forced on us by the European institutions; that austerity was a policy option that we followed, when presumably other options were available. The truth is that when you are bankrupt, you don't have the luxury of options. It's about survival.

Countries that cannot understand their past generally make the same mistake over and over again. It's a very dangerous narrative that our problems were caused by other people and especially Europe. So what were the options that existed then and to some extent still exist?

Option one: leave the euro and re-establish the punt, followed by massive devaluation of the relaunched punt against the euro. Nothing easy here, because of the problems from capital flows in and out of the country, the flight of multinationals, and the doubling of all debt, personal and sovereign, because of devaluation.

Option two: renege on the national debt. This is being put forward by some on the left. It's a kind of national 'can't pay, won't pay' chant. Problem here is that when you go looking for more money from the international money market - you won't get any. The other problem is that private investment into Ireland would dry up. Did this work for Argentina? I don't think so. Ten years after the first repudiation of national debt, they're still in an economic tailspin.

Option three: leave the European Union altogether so that we are no longer governed by the new rules, backed by us in a referendum; rules reducing debt and deficit year by year. Is this realistic as a trading nation? Do we really want to throw ourselves at the mercy of our biggest neighbour? I don't think that's a smart option either.

Anger is understandable, but is not a solution. It seems that the populist parties in Ireland, on the left and right, are in a competitive tussle to see who wins the anger contest. They are clueless on what's needed to grow a modern economy. People may not want to hear this but it was Europe and the IMF that funded us when no one else would. It was an Irish government which gave the bank guarantee, not Europe. Without the money we got from Europe, we would have to balance our books in one year with a cataclysmic effect on our society.

The tax base had collapsed because of the property bubble. Public sector pay almost doubled in a 10-year period running up to the crisis. All of that had nothing to do with Europe. Clearly the decision by the ECB not to allow senior debt write down was completely wrong and needs to be rectified. But in wanting to blame Europe for our troubles, no one wants to even consider the prospect that actually things could have been worse.

The upcoming Greek election is fascinating. Whether Syriza, the populist left-wing opposition party, actually win and form a government, we will have to wait and see. As they get closer to government and as the international money markets take flight from Greek sovereign bonds yet again, we will have to see how radical Syriza actually is?

It's time for those of us in the democratic centre of politics to fight back and to take on those populist elements that constantly lie to the public. This year could actually be the year when our very own populist parties are held to account as to what they actually want to do if ever in government. Politics is about solutions, not anger. Hard work, persistence and determination saved this country and put it on the road to recovery. Fairy tales are for children. As the general election approaches, parties of the centre and the media have a duty to shine a strong light on the fairy-tale economics and the fairy-tale politics of the left and the right.

Brian Hayes is a Fine Gael MEP

Irish Independent

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