Gerard Howlin: We're paying for Varadkar's decision to give us what we wanted

On his last lap as taoiseach, Leo Varadkar put his foot to the floor and accelerated the five-stage plan to reopen our economy. The consequences are ongoing
Gerard Howlin: We're paying for Varadkar's decision to give us what we wanted
Leo Varadkar: 'The economic impact [of Covid-19] is going to be a lot worse than you or I may have thought back in March or April, or even what the Government was formed.' Picture: Sam Boal/Rollingnews.ie

Tánaiste Leo Varadkar made a belated admission on Monday. 

“The economic impact [of Covid-19] is going to be a lot worse than you or I may have thought back in March or April, or even what the Government was formed,” he said. 

The dogs in the street knew that for a long time, and so did the people who negotiated the programme for government. That programme is almost all uncosted because it was written as a political playbook to get a certain combination into government, not as an economic plan. The Green party's then-finance spokeswoman, Neasa Hourigan, may have been out of sorts with the project politically, but she was on the ball when she spotted it was pie-in-the-sky. 

Budget day is the day the sky falls in on that illusion.

"Back in March or April, if you'd asked me, I would have said that this was going to be a three-month phenomenon, a single-quarter severe hit to the economy and that we would be in a very strong recovery by next year," said Mr Varadkar. “That now looks less certain.” 

Well, back in March or April, there were a few in that school of thought. By May, that optimism was failing and by the time the programme for government was being seriously negotiated in June, nobody believed it. But no matter. The political project required creative ambiguity.

If there was any doubt that the programme for government is not an economic plan, we are being told we are to have one separately, with the budget, called the National Economic Plan. 

What gave the recent, but increasingly irrelevant process of government formation a unique flavour was the requirement to cook to order a smorgasbord to appease the appetites of the members of three different parties. Those elaborate tasting menus were an inflation of expectation at precisely the moment our means of meeting them were rapidly depleting. It has been downhill since.

That inflation of expectation coincided with another. As the middle distance of the next two to three years was festooned with rose petals, so was the immediate future of the coming two to three months.

For his last lap as taoiseach, Mr Varadkar put his foot to the floor and accelerated the previous five-stage plan to reopen our economy. Bored and restless, we were delighted, but it was an appalling mistake, and the consequences are ongoing.

It did the worst thing possible, which is to give people what they want. 

They don’t thank you. 

Mr Varadkar demonstrated leadership in the early days of the Covid-19 crisis but he ended it by caving to public opinion.

It was a classic case of playing politics for applause. But no matter, that’s all for Micheál Martin now — and the last few days haven’t been a showcase in how to inspire confidence.

Kildare, Laois, and Offaly, and the meat plants there, if you will excuse the pun, are a taste of things to come. 

The initial lockdown on St Patrick’s Day was the easy bit. What to do was crystal clear. There was the enormous advantage of having a stunned population in thrall to instruction. 

The passing of time, the accelerated opening-up, the very idea, let alone the fact, of a ‘green list’ of countries to travel to, and the contradictory ambiguity between a ‘green list’ and advice not to travel unless absolutely necessary raised expectations and loosened public morality.

I use the old-fashioned term of public morality and its related phobia of company-keeping as apt descriptors for what has gone wrong. The reason generations of now-dead bishops lost the battle is essentially the same reason ministers are losing it now. The threat of damnation is no longer potent enough. The fear of public ostracisation is not strong enough and, however willing the spirit, the flesh is weak. What drew our grandparents in all weathers, on bicycles to dance halls, is pulling people together now too, when we need to stay apart.

The compulsory use of facemasks in most enclosed spaces may help in two ways. One is to reduce the spread of the disease. Secondly, every person wearing a mask is a poster for the precautions we all have to take but are becoming restless about. As Mr Varadkar, now the Tánaiste, frankly stated, and the interdict on three counties demonstrates, this is far from over. It has a very long way to go in time and in terms of ultimate consequences.

A semi-shuttered economy — and that is all we can hope for until there is a vaccine — means that the spike in cases at meat plants are an element of a likely recurring phenomenon. It can be any sector but when prevention fails, only crude remedies are available. We maintain the façade of what we were used to, but the means of support, are largely shut down. So, we sputter on, on borrowed money, hoping for a turn in the road before we run out of credit.

The single economic issue we face is how much money we can borrow and for how long. No country ever wants to find out what its credit limit is because once you do, it’s too late. Mr Varadkar was getting his defence in first on Monday. Expectations won’t be met. There will be a winter of discontent. A hard reckoning with reality is unfolding. 

The meat factories are a case in point. This is about significant numbers of people living together in crowded settings. They are delivering for an essential national industry that is already under pressure from farmers for better prices, from consumers who are turning away from red meat, and from the small matter of Brexit. 

We all agree something should be done. Nobody will agree to carry the extra costs which, ultimately, must be borne somewhere along the supply chain from farmer to factory to processor, retail, and consumer.

The bottom line is that a way must be found to keep functioning parts of the economy open, so we can sputter on a little longer. 

Ultimately, though, all normal expectation is off the table. Monday was the first time a leader of one of the parties in Government hinted at that. Even with borrowing on a scale that may ultimately be unsustainable, only hard decisions are options on budget day. 

The readjustment in expectation required has not yet extended to cancelling an across-the-board 2% increase in public-sector pay on October 1, nor proceeding with a planned increase in the old-age pension to 67. That’s billions, by the way. It is where politics meets economics. My money and yours, will likely be put on politics every time.

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