Former Minister for Finance Charlie McCreevy conjured up his own epitaph when he uttered the now legendary description of his budgetary tactics that went something like “When I have it, I spend it and when I don’t, I don’t”. This phrase has become somewhat folkloric. Its attribution is cited as sometime in the mid 2000s and the exact wording changes depending on the telling. It is a tale of legendary negligence, a legitimation of the burn after earning that characterised the production of Celtic Tiger wealth. It was a warning sign of the inevitability of hard times to come that we mostly chose to ignore.
McCreevy’s comment is iconic of the era in which it was uttered. During the Celtic Tiger period a collective consciousness was arguably created in which most of us believed in the myth of eternal economic growth (or if we didn’t, we at least did not think about the consequences of collapse so often). In a way the Government had convinced people that they didn’t really need state support. On some level we all knew that the Government were squandering the tax intake but it didn’t somehow seem essential to (most of) our daily lives. We were producing our own wealth, creating our own opportunities. They had pulled off the neoliberal trick of convincing the country that it wanted less and not more state intervention. And this produced new types of citizens. In the space of a generation the Irish had gone from a people that saved before they bought, questioned any extravagance, and were wary of debt, to a nation only too happy to blow their paycheque on nights out, put the bills on the credit card, and become sodden in debt to buy their dream home and all the trimmings in one go. For a long time the Irish had been a people who simply didn’t have it to spend. Now that we had it, by god we were going to spend it.
This attitude was actively encouraged by the Government in almost everything they did. They transferred the tax burden to assets, property in particular, and talked up the property market at every turn, encouraging people to buy, buy, buy. They generated an economy based on consumption and called it growth, and they dealt in macro-economic statistics to obscure the uneven and precarious nature of this ‘expansion’.
As an Irish Times profile of McCreevy from 2006 suggests even the SSIA scheme he designed to “cool the economy at a time when it was white-hot” was later sabotaged by encouraging people to blow the savings they had brought to fruition: “…he undermined the stated purpose of his own scheme with the astonishingly imprudent injunction to people to ‘party on’”. As Mark Brennock and Chris Dooley go on to suggest, McCreevy’s economic taxation and budgetary policy was in fact a non-policy that ignored any evidence-informed approach in favour of a fatalistic attitude towards the public purse.
While some of the 20th century’s finest minds devoted their lives to understanding the link between public expenditure and the real economy, Mr McCreevy chose to disregard that sum of human knowledge for the fiscal philistinism of “if I have it, I’ll spend it”.
The party is now well and truly over. But McCreevy’s credo is still very much in evidence. It’s just that now we don’t have it so we won’t spend it. Political debate is now being focussed on how to save on public expenditure, which is obviously necessary. But at the same time, this tells us little about how the economy will actually be grown in the short to medium term. Cutbacks do not signal an economic strategy for growth, just a constriction of the economy further. Rob Kitchin made the comment recently that the Government’s current economic plan is not a plan but a budget. It slashes and burns without any sense of what it is slashing and burning to achieve apart from savings. He suggests
What should be happening is a rapid reworking of the National Development Plan – linking up sectoral and spatial plans – to produce a reasonably coherent pathway to 2014, with a realignment of budgets to support that plan. At least that would mean that what spending and investment remains has some strategic goals and there is a roadmap as to how Ireland is to proceed back out of the crisis it has created for itself.
Elsewhere, David McWilliams has suggested that the policy of cuts to get out of recession is a tried and tested formula for failure. He argues, “In economic terms, this option is madness verging on criminal negligence”. Instead we need to spend to grow the economy. There is no way that cuts are tantamount to an economic strategy.
After unveiling the figure of €15billion needed in cuts, Brian Cowen claimed:
Our obligations are clear. We must demonstrate that we are bringing sustainability to our public finances. We must stabilise our debt to GDP ratio over the period of the plan and we must set out our strategy for returning our economy to growth.
These ‘obligations’ are presumably to the ever watchful credit rating agencies and bondholders. The statement is reflective of the Government’s predisposition to avoiding policy implementation at all costs. The hope presumably is that if we can ‘stabilise our debt to GDP ratio’ the Government can stop haemorrhaging money and Ireland will look more enticing again to investors, paving the way for someone else to come in and sort out the problems of the real economy. Moreover, as the government are slashing and burning their own expenditure, they are urging those who ‘have money’ to spend it. While providing little to feel confident about, the Government expect to instil confidence in the country by sucking more money out of it and replacing it with the thin air of empty rhetoric.
At the same time Cowen suggested that if the economy grew at a higher rate than expected the level of cutbacks and tax increases would not be as severe. This mirrors the logic of McCreevy’s mantra. It is the policy equivalent of ‘ah sure look, we’ll see how we’re doing in a couple of months and decide then’. It is exactly this reliance on reactive policy actions that created the context for the serious deficit in public finances that we now face. This is emergency room economics. Ireland may stop losing blood, but little will be done to stave off long-term illness. The “When I have it, I spend it and when I don’t, I don’t” mentality has brought us this far down the wrong road, and it is folly to expect it to turn us back around. What’s more, I feel, is that people generally don’t believe this rhetoric anymore. There is an acknowledgement that Ireland does have some serious problems that need addressing and which are not going to be solved through the same half-baked political strategies that created them. The political landscape is characterised by party wrangling, posturing, point-scoring, and bullshit. Without some serious attempts to get beyond the current state of play there is little hope for overcoming these problems. Let us not talk falsely now, the hour is getting late.
Cian O’ Callaghan