It’s time for the Celtic Tiger II — on poverty, illiteracy and healthcare

AS they say in the movies, we need to be afraid. Very afraid. There’s a story being told, and it’s a pretty frightening one.

It’s being told by shiny-eyed economists with wavy hair and by television experts who know how to illustrate their story with pictures that add to the sense of foreboding.

It’s all very watchable, gripping even. The sort of thing that would keep you glued to your seat.

There’s no doubt whatever they believe the story they’re telling and that they see themselves as having a public duty to warn. But we need to be alert. Their story is of an economy on the brink of collapse, of ruin staring us in the face. We’re watching, and we’re getting more anxious by the day.

But there’s one group of people to whom this story is not in the least frightening. They’re the key policymakers, the mandarins. They want the story out there. They want us to be nervous about the future because it feeds into the very thing they want to do. It encourages us to allow them, if not indeed to demand of them, that they should start screwing everything down.

That’s the way things are done nowadays. If the economy is rip-roaring ahead, you stimulate it as if there was no tomorrow. Tax cuts? No problem. Spending increases? Absolutely. Pay rises for everyone? Why not some back-money as well? A big increase in your mortgage? How much would you like?

Then, when the economy slows down, the modern-day response is to cut back on everything. Or, alternatively, sell something, privatise it.

Or, in even more recent times, see if it’s possible to get the free market to do what used to be done as a public service. So in a sense, it’s not the story we should be afraid of, but the climate the story is creating.

Because there is a basic flaw in the story, and we shouldn’t forget it. The images, the warnings, the tone of the commentary — they are all designed to remind us of the bad old days of the 1970s and 1980s. Even some of the phrases used — future shock, for example — are aimed at triggering a sort of Pavlovian response that makes us shudder at the memories of the oil shocks of 30 years ago.

But this isn’t 30 years ago when Ireland was the poor relation of Europe. Throughout the 1970s and 1980s we had a tiny economy, hugely overburdened with debt, crippled by emigration and inflation. I can remember hearing the regular budgetary announcements that our national debt was well in excess of the total wealth of the country. I was a trade union official in those years and, like all of my colleagues, faced demands for pay rises of 20% and more from our members. They, in turn, struggled to make ends meet on salaries that were eaten up as soon as they were earned.

Almost the only thing we were good at as a country was maximising the hand-outs from Europe, paid in a desperate and despairing effort to try to encourage the Irish economy to grow.

Now, in a situation that was unimaginable back then, we are the richest economy in Europe, with debts that are a tiny proportion of our national wealth, inflation at manageable levels, inward migration that has itself been a further stimulus to economic growth and a net contributor in most of the areas of European policy where we used to be famous for our begging bowl.

Then we were a poor economy that couldn’t grow, and our people suffered as a result. Now we’re a very rich economy where growth is slowing down but still as good as anywhere else in the world.

That’s the bottom line. There may be some structural weaknesses in our economy, some areas where reshaping is inevitable. But those who would have us believe we’re on the brink of ruin are playing into the very same hands that have made people suffer in the past.

Because, make no mistake about it, the real cycle at play here is a political one, not an economic one. We’ve seen it before and I fear we may be about to see it again.

Before every election, public spending on things that are popular shoots up. After every election, public spending on things that are essential gets screwed down. And the more the commentators cry wolf, the more the system rubs its hands in glee and reaches for its carving knife.

Every time I see this political cycle start to swing into action, I remember poor old John Maynard Keynes — the only professional economist chosen by Time magazine (no bastion of liberal thought) among its selection of the 100 most influential people of the 20th century.

The man who saved capitalism they called him, and this is what they said about him: “And Keynes’s basic idea was simple. In order to keep people fully employed, governments have to run deficits when the economy is slowing. That’s because the private sector won’t invest enough. As their markets become saturated, businesses reduce their investments, setting in motion a dangerous cycle: less investment, fewer jobs, less consumption and even less reason for business to invest. The economy may reach perfect balance, but at a cost of high unemployment and social misery. Better for governments to avoid the pain in the first place by taking up the slack.”

STIMULATE the economy when growth slows down, even at the cost of running a deficit. When the economy is roaring ahead, impose discipline — harvest against a rainy day. That was Keynes’s formula, revolutionary in its day, and tried and tested successfully for several generations. Then it fell out of favour as the proponents of the unchained free market got the upper hand. Now, as we can see, we do precisely the opposite of what Keynes proposed. You’d have to suspect that he would be turning in his grave at a political system that throws tax cuts at high growth and spending cuts at lower growth.

But that’s what is on the cards if we are all sucked into the new mythology. And who will suffer if that happens? The rich? The political class? The mandarins? None of them. It will be the same people who always suffer. When the belt-tightening starts, those who can least afford a belt will have to tighten it most.

But one other thing will suffer. We’re not just a rich country now, we’re the beginnings of a great country. We know problems that seemed insurmountable a couple of decades ago — debt, inflation, unemployment, political violence — can all be beaten.

There is no reason why we should be afraid to take on the problems that remain — poverty, illiteracy, healthcare, the environment — and make the same sort of national statement about them. Between us all we lifted the many out of hopelessness in two decades, and we have the resources and the skills to lift everyone. Unless we allow ourselves to be beaten and cowed by the same old messages of despair. We mustn’t let it happen.

We’re bigger than that now.