Job creation is best way to tackle poverty

IN THE weeks leading up to the budget it is not unusual to see an onslaught of whinging from the various interest groups across the economy.

The poverty industry has been particularly vocal since the publication of the Estimates, but on the other side of the political and economic spectrum, the employers group, IBEC, has been equally vocal.

Regardless of what Mr McCreevy does on December 3 he will not please everybody and in fact he will be doing very well if he manages to please anybody, but that is the nature of the whinging industry.

Thankfully, the minister is strong enough and confident enough to ignore the lot and do his own thing. That is how democracy should work. The Government got a mandate from the people last year and will have until the next election to govern as it sees fit, at which stage the electorate will be given another opportunity to vote for continuity or change. Those who have a problem with this clearly have a problem with the democratic system as it applies in Ireland.

There are two basic ways of running a western democracy, either a left-wing, social democratic model, or a right-wing, free-market approach. The former model has not worked in countries where it has been applied rigidly, or indeed in countries like Germany where it is still being applied, albeit in diluted form.

Countries such as the US, and to some degree Spain and the UK best exemplify the free-market approach and based on criteria such as economic growth, employment generation and wealth creation, they certainly outscore the social democratic countries.

In recognition of this reality, most social democratic governments are gradually moving to the right. Chancellor Schroder’s government in Germany is a prime example of this shift.

The current Irish administration, particularly those holding the economic briefs, such as Mary Harney and Charlie McCreevy, is most definitely of the free-market variety. There is a strong emphasis on low direct tax rates and, notwithstanding a couple of years of slippage, firm control over government spending. This approach was exemplified by the content of the recent Estimates, and in all probability will be exemplified again in the upcoming budget.

The philosophy is that controlled spending and low tax rates will maximise economic activity. The fruits of this activity will then benefit all.

The poverty industry and those on the left in general have a problem with this top-down approach.

Their bottom-up approach would envisage initially tackling all

social problems in the economy and getting the productive sector to pay for it. The problem with this model is that the productive sector becomes so burdened with financial responsibilities that entrepreneurial activity is stifled, economic activity is undermined and unemployment rises.

Social problems would be the inevitable result.

People of this political hue believe the right-wing experiment has not worked. They argue that the gap between rich and poor has widened and we are worse off than a decade ago.

While the gap may have widened, the simple fact is that on average everybody is better off today than a decade ago. The fact that some may have done better than others is primarily a result of effort and endeavour. Should effort and endeavour be punished or derided? I think not.

The best way to give a person dignity and help alleviate poverty is to provide them with a job. On December 3rd Mr McCreevy should ensure that everything he does will further the objective of maintaining high employment and he should give the two fingers to the whingers. Maintaining high levels of employment is the only way that Ireland will be able to sort out the numerous problems that characterise its public services.

Strong economic growth is ultimately the only way to generate the resources to address the social and economic problems of the country.