Madam, – In recent weeks “official Ireland” has been basking in a (self) righteous glow because we are “not like the Greeks”. We have taken the pain and satisfied the gods of the bond markets, or so the story goes. But I fear we are to be disappointed.
The Government has enjoyed almost unqualified support for its approach to fiscal correction, from most political parties, business, the bulk of the media and the commentariat.
Columnist Paul Krugman has characterised this phenomenon in the US as “groupthink” (Opinion, February 8th). He says the “fiscal scare tactics” of the right remind him of what took hold in advance of the Gulf War, when only one narrative was permitted.
To date, the only dissenting voice in this country has been the Congress of Trade Unions. Our view is that taking 7.5 per cent of GDP out of the economy in an effort to bring our borrowing requirements back below 3 per cent of GDP by 2014 will produce such a deflationary shock that it risks prolonging the recession for perhaps 10 years. I find it surprising that establishment opinion is so homogenous on this question.
That is not the case on our neighbouring island where, in recent days, large groups of economists and the two main political parties, have taken opposing views on precisely this question. The debate is being conducted through the letters page of the Financial Timeswith one group of economists and the Tory Party favouring the short sharp shock approach adopted by the Irish Government, while another group led by Robert Skidelsky supports the Labour government's more gradual and nuanced approach. This latter viewpoint was endorsed by the Financial Timeson February 19th.
If our Government and its supporters persist with their “groupthink” they will condemn a whole generation of our young people to long-term unemployment. They insist they are right, but have they considered for a moment what the consequences will be if they are wrong? – Yours, etc,