Government struggles for innovation as the rest fight to survive

There is one thing that Ireland and the EU have in common — a lack of innovative thinking.

Finance Minister Michael Noonan says a herd mentality and a dangerous consensus at the top of Government and the banking sector is to blame for the country’s nosedive into debt.

But there is no sign of a real change from the policies that brought us to this point. There seems to be a complete ignorance of studies which show that the more inequality and the greater the gap between a country’s rich and poor, the less wealthy and healthy that society is.

Instead, the measures drawn up by the Department of Finance to cut the country’s deficit and debt, which were approved and added to by the EU and the IMF, aim to increase the gap and build the recovery on the contribution of the less well off.

The policies have been analysed by the European Commission, quoting studies that say for a cut of 0.6% in wages, employment increases by 0.3% and GDP by 0.2% — over 10 years.

Basically, if workers are paid less, then employers can spend the savings employing more workers which will increase productivity.

It’s like saying that if we eat less there will be more to go around and more people with the strength to work — but there are no such restraints on the quantity available for those closer to the top of the pile.

They also say that paying dole to people acts as a disincentive to work, disregarding the fact that there was near full employment when the jobs were available during the boom. Instead they insist if you cut dole — reduce people to below the breadline — they are more likely to work.

Of course, this is a cycle. However much you cut wages you must cut dole even more to ensure that any kind of work is more attractive. This will make the minimum wage meaningless as employers pay just slightly more than the ever decreasing dole.

This is in addition to the woeful supports for working mothers and single mothers. And less money coming into a home at a time when the cost of education is rising makes it harder for families to keep children in education. It is happening, too, when the tax net is widening and even those on the lowest incomes will be taxed.

It’s a downward spiral in other words. But not for everyone, as we see from the salaries paid to the heads of Ireland’s top companies.

Anybody doubting that nothing has changed just has to look at the firesale of homes organised by a British firm in one of Dublin’s poshest hotels last week. Given that the banks are not giving mortgages, the property is being bought mainly by people who could afford to throw away money, and probably don’t need a home. There is no attempt to help families in tiny homes that need extra space to do a swap, for instance.

There is no attempt to hold a public debate about the kind of country we need or want. Instead there are mind-boggling discussions on radio news programmes about why, with all the cuts, Ireland’s growth was not better. It has connotations of old medical practices of placing leeches on people’s bodies to draw blood and then wondering why they felt weak afterwards.

Workers earning less to improve growth will have less of a say in the future as the programme also plans to dismantle social partnership and any form of centralised wage setting. Three years ago Ireland’s social partnership model was praised for contributing to the country’s remarkable growth. Now the crisis is being used as an excuse to ensure the workforce is left without a unified voice.