Bid to share gain as well as pain is vital

I DON’T want to sound too pessimistic, but ... How often is that classic introduction heard in the course of the day?

Instinctively, you know that what is about to follow will not be pleasant.

I don’t mean to be critical, but ... why did you do such and such, or how did you think that line of action would deliver the results we hoped to achieve?

It’s our way of letting ourselves off the hook when we want to do say something unpopular, but when the comments refer to the economy, then it is time to say easy on there, let’s not get carried away. The above introduction in this instance was by IBEC president Maurice Pratt in his address to the biennial lunch of the country’s major employer body. So having covered his back, Mr Pratt went on to talk us into a psychological depression and an economic recession.

He went on to say that inflation would destroy us, that it was embedded in the economy, God help us all; that unemployment was increasing and that our public finances were in great difficulty.

To make a bad situation worse, the National Development Plan was under pressure and would not be completed in time, while rising wages were now being compounded by the substantial increase in the cost of insurance.

Further aggravations to the economic soul as perceived by the IBEC president are the rising costs of energy, local authority rates, waste and water disposal.

Have we reached the point that obsession over costs are going to exclude all other form of rational debate on the future direction of the economy.

For starters, the inflation rate has continued to fall, despite the concern that we are heading for deep trouble. Again, there are different sides to this story where in the services sector, inflation is quite high and the insurance rip-off is still a source of major aggravation.

During the week, Tánaiste Mary Harney pronounced she had made resolving the insurance question the main objective of her term in office. The Tánaiste happened to be launching the Financial Services Regulator at the Mansion House in Dublin, where concerns about the consumer and the lack of fair play suffered by the consumer has been put at the core of the regulatory body.

It means, or it has to mean if it is to succeed, greater scrutiny of the banks and other financial services companies, about 4,000 in all, many of which account for a sizeable portion of the membership fees collected annually by IBEC.

While several factors influence the cost of motor and general insurance, one of the big issues, identified by the Tánaiste on Thursday when she launched the new authority, was lack of competition. We hear a lot about loss of competitiveness from IBEC and others, but the huge issue facing, not just Ireland but the global economy, is the contraction in the financial services sector as banks and insurers merge or buy one another over in order to gain competitive advantage.

At its core, driving it on, are the corporate financiers of financial institutions where takeovers and mergers are cynically used to drive up the market value of companies. This has become central to the way the free markets conduct themselves. The process has been driven by greed and little else. Scandals like Enron and WorldCom testify to such crass self-interest and we are fast reaching the point where corporate greed and not excessive demands by workers or inflation, have become the real threat to the world economy and its future development.

Free markets are the way forward. But free doesn’t mean the right to indulge in unadulterated greed by those at the top.

Countries and economies work best in the long run when some real attempt is made to share the gain as well as the pain.