So, the election, or perhaps we should just call it the auction, is in full swing. The date may officially be called next week.
We see Renua promising, or perhaps threatening, to eviscerate the tax base under the guise of a flat tax. At least they are honest.
Counterpart that to the Fine Gael wish, as we can assume it to be being uttered by the party leader, to have a “US-style” tax system.
Presumably the US tax system for corporates, with a headline rate of 35%, is not what Enda means but rather the personal tax base.
Corporates don’t yet vote, but people do.
We see Fianna Fáil with a host of targeted tax reductions, ranging from the USC to property tax; Sinn Féin is doing something similar, especially on water charges; while Labour is now discovering it too is against the USC, which brings in billions of euro by the way.
The Social Democrats alone among the parties seem to be committed to a more or less unchanged tax system and appear to be committed to using the monies for public spending.
All of this, combined with the re-emergence of Irish leaders on the world stage telling the nations of the earth how to manage their economies like ours, suggests that we have as a polity learned absolutely nothing from the crash, its causes, its progress, its outcomes or its effects.
We will, as a polity, vote in hundreds of thousands for parties committed to giving us more matches, more lighter fuel and more economic kindling.
We will then blame the manufactures of the matches and hydrocarbon industries when we burn the place down.
We are, more or less, at full tilt now in economic terms.
Unemployment is falling, GDP, that great fictive shibboleth of Irish wellbeing, is rising.
Even mortgage arrears are topping out. Now is not the time to pour fuel on the economy.
Now, indeed, is the time to start to rebuild things such as a national pension reserve fund and to invest in making a seamless health service, and creating an inclusive education system, a decent public transport system for the whole country.
Things that are generally seen as public goods.
That isn’t ideological — it’s pragmatic.
Given our head for money, we as a nation will spend it on property, imported luxury and consumer goods.
In an economy with a ratio of private sector debt to GDP well in excess of the EU average, at 263%, even though a chunk is attributable to multinational head offices engaging in Father Ted-ing of accounts, we need to tread very carefully.
Interest rates are very, very low.
The ECB’s quantitative easing (QE) is directed through the financial sector and failed to move the economic dial.
It has resulted in a very large increase in financial sector wealth for the 1%, but the trickle down is slow.
More QE will result in more wealth for the 1%, but little else.
What QE has done is to reduce bond and interest yields and we do benefit.
At some stage, however, QE will end.
At some stage bond yields and interest rates will rise again. If we have failed to cut our debt burden we run a real risk of being hammered again.
The best way to reduce the debt burden in real terms is to grow the economy.
The economy has been growing thanks to exports. That is great, so long as it lasts.
The real issue in this election shouldn’t be about who can cut personal tax rates the quickest but should focus on insulating the economy from external shocks.
The UK vote on ‘Brexit’ looms.
The US is stuttering and may be recession-bound.
A republican president, of whatever manic hue, might be bad news for Ireland and its Father Ted multinational sector.
In the global economy we see a flagging China, which adds further complexity to the outlook.
Auction politics is great fun.
But we should expect more.
Brian Lucey is professor of finance at the School of Business at TCD.
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