Economic plans should be based on hoping for the best, but planning for the worst. And those of us over a certain age will remember the fear we had to question a teacher when we did not understand what he had said.
He, generally speaking, either lost the cool or made you feel like an idiot.
Obviously, Finance Minister Michael Noonan’s years as a teacher or his study of economics in UCD did not go to waste.
Why else would he use novel expressions such as “fiscal space” when talking about how much financial leeway is available to him as he infers the availability of more post-election goodies?
That is, if only his party or the current Coalition is re-elected.
Most of us had no clear understanding of the meaning of that expression until a few short days ago.
Yet we did not want to hold up our hands and question the ‘master’ lest we appear to be foolish. According to Samuel Johnson, “the last refuge of a scoundrel is patriotism.”
Perhaps we should re-adjust that to ‘the last refuge is the person who uses jargon to confuse the audience’. It’s obviously seen as a useful artifice to divert attention from what is really being said.
The problem is that we are misled, partially because we allow ourselves to be misled, and we accept what is being said without questioning what is really meant.
In this case, all of the political parties outside of the Coalition are working to the fiscal space figure released by the Department of Finance while Mr Noonan is quoting another figure.
The minister is giving himself more flexibility in the Coalition’s current main agenda — that is, to get re-elected.
But digging deeper into this fiscal space shouldn’t fill us with hope for a more prosperous future.
Sure, Government, and indeed the Opposition, are doling out promises and goodies like there was no tomorrow.
Yet, what they are failing to do is to tell us that some of these goodies are simply our own money being handed back to us — as in, Michael Noonan taketh with one hand and giveth back with the other.
It could even be described as a sleight of hand.
In the Coalition’s case, it appears to be that additional funds are being accrued through failing to index the tax bands.
In other words, we pay more tax or contributions on an ongoing basis as our salaries increase. It’s almost a zero sum gain.
Unfortunately though, all of the goodies that are being promised cannot be so described.
Mr Noonan is betting on recent improvements in the economy and recent windfall increases in corporation tax take continuing into the future. It would appear that he and his Government colleagues are alone in that belief.
The EU, the Fiscal Council, and the rest are not convinced that these incomes are sustainable.
Indeed, they have pointed out that our debt levels are high risk in the medium term.
The potential impact of a Brexit or a tsunami being created by the Chinese economy faltering is simply being ignored. In these highly charged times it’s easy to be described as a doomsayer.
As we slowly creep out of recession we don’t want someone telling us to “hold our horses.”
However, we are all hoping for the best but we have to accept there is much outside our control.
We must prepare for the possibility that not everything is going to slot into place just the way we want it to.
EU changes to the way corporate taxation might operate in the future can theoretically be vetoed. But we can be brow-beaten into accepting some change. Each time we submit we cut away some of the potential corporation tax that we need desperately.
Despite what we see in larger and far more influential economies around us we should not only be hoping for the best but also planning for it.
If the EU, and the rest, are correct, anything could happen and we would suffer a repeat of 2007.
It’s best that we all hope for the best but plan for the worst. At least then we can be prepared to be pleasantly surprised.
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