The Irish Examiner View: Tax-and-cut reaction won’t work

The Irish Examiner View: Tax-and-cut reaction won’t work

The Nobel Prize-winning scientist, Stanford’s Michael Levitt has predicted that Ireland’’s coronavirus death rate and infection will "burn itself out" within two weeks allowing us to enjoy whatever kind of normality awaits. Should Professor Levitt be right that old phrase - "all our Christmases came together" - would be utterly inadequate.

That happy eventuality would lift the country’s mood in a spectacular, positive way. Joy unbounded etc. However, any celebration would be drowned out by the sighs of relief, the heartfelt hallelujahs from those struggling to form a government.

Those hallelujahs, like nearly all hallelujahs really, would be more a punctuation mark in our journey rather than the full, unfinished story. Whether Prof Levitt’s optimism, though he predicts an Irish death toll of around 2,400, is justified or not those who bravely - yes, bravely - step forward to form our next Government will have to make some of the hardest decisions faced in Leinster House since this Republic was established.

Acceptance, much less gratitude may not be their reward. That, sadly, is not hyperbole but just the cold reality. Oh that it was otherwise but it is not. 

The full scale of the economic implosion is not yet known, which is probably just as well. Nevertheless, a few figures to set context. More than 20m Americans lost their jobs in April. America’s unemployment rate more than trebled as the world’s largest economy went into lock down, provoking a financial crisis unseen since at least the 1920s’ Great Depression. Official figures on Friday put America’s unemployment rate at 14.7%, up from 4.4% in March and a near 50-year low of 3.5% in February. If the scale of that collapse is harrowing it is hard to know how to describe our situation.

The Central Statistics Office estimates our unemployment rate is, for the moment, 28%, by far the highest ever and about twice America’’s rate. There were 819,007 people effectively classified as unemployed in April, up from just under 420,000 in March.

The total includes those newly reliant on the temporary pandemic benefits, 602,107 at the end of April. Those extraordinary figures demand extraordinary responses and, should Prof Levitt’’s optimism prove a miscalculation, then the sustainability of those responses will come into ever-sharper focus. 

Myriad businesses, and their workers, face unprecedented change but one example will suffice, any more would too much like the opposite of gilding the lily. Ryanair last week published April figures. In 600 flights the airline carried about 40,000 passengers. In April 2019, it carried 13.5m passengers. That’s a drop of 99.3%. Can any enterprise, no matter how flexible, energetic or efficient, no matter how impressive its record in generating wealth, recover from that kind of carnage? Many, if not most, businesses are in a similar same bind.

Political, social and ethical judgement is required to say whether this collapse is a consequence of C19 or an earlier-than-expected reckoning for a tottering system defined by the concentration of wealth at the expense of the majority of humanity. Yet, already conventional solutions to an unprecedented crisis are offered.

The Fiscal Advisory Council has warned about a need for tax rises and spending cuts to foster economic recovery. It is hard, at this moment, not to see that kind of advice as politics dressed as economics. Hopefully those trying to form a government will recognise that and act accordingly. If they don’’t then we will have a second crisis to resolve - a prospect we might consider as we wait two week to see if Prof Levitt is right or wrong. 

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