In the service of an idea

The reduction of public policy issues to simple economic calculus is a practice that needs to be challenged. By Frank Groome.

In a recent address to the Irish Congress of Trade Unions, Taoiseach Enda Kenny declared his belief that while Ireland “cannot change the past…we can influence our own futures.” The Taoiseach then outlined his vision of this future: “We need to build the confidence required to enable us to re-enter the financial markets, as lenders accept our capacity to run our own affairs. That means making the necessary adjustments to ensure that our spending and revenue are on a sustainable path, while we make the structural changes to restore competitiveness and make Ireland an even more successful location for investment, enterprise and jobs.”

While it is hard to disagree with the statement about shaping our own future, the Taoiseach’s vision of that future is a vision presented very much in the same vein as the recent past - a future that is driven and shaped by the same international financial forces and economic principles that are the cause of our problems today.

For the last three years there have been daily discussions in the media and elsewhere regarding the economic challenges facing the country. Underpinning much of this commentary is a basic assumption that the central tenets of neoliberal economic principles must be at the heart of any solutions: the deficit must be reduced, public expenditure must be cut back, and where possible we should outsource or privatise the core functions and services of government. That there might be other viable solutions is not considered and rarely even mentioned. This continued commitment to neoliberal economic principles is a legacy from the Celtic Tiger era that today functions as an ideological straitjacket limiting the government’s capacity to provide effective solutions in the common interest.

The proposed solutions by mainstream politicians to our current dilemma proffer an insight into the logic behind this continued attachment. Most, if not all, are premised on a narrow ‘hard’ scientific economic assessment of the problems we face; an assessment that calls for the correct application of ready-made prescribed formulas in order to end our collective suffering. These prescribed formulas, taken directly from the neoliberal economic playbook, involve fiscal austerity and the privatisation of public assets or services and usually also include steps to liberalise financial markets. In Ireland, this last aspect is already fundamental to how our economy functions, and is not considered necessary; however, the first two aspects are being pursued blindly and without regard to their social and political consequences. There is no recognition by Irish policymakers that by treating economics as a ‘hard’ scientific process in the first instance - rather than a social science - the Government is failing to consider the consequences of our economic decisions on the general welfare of the public. The outcome of these decisions is a well documented chronicle of human tragedy, and getting worse.

The Fianna Fáil-Green coalition worked tirelessly to rally support for their preformulated solutions by arguing that if we didn’t apply the economic remedies desired by the international markets - irrespective of the predictably negative social outcomes - Ireland would lose its sovereignty and ability to make its own decisions. The sad irony was that the very call to maintain our sovereignty through an adherence to these dominant economic requirements was declared precisely because we had already lost the sovereign capacity to make our own choices.

For Ireland to begin to formulate independent, sustainable and effective policy solutions in the public interest we must learn to recognise, understand and challenge the current political discourse that serves the interests of this ‘hard’ scientific approach to economics.

At the heart of this political discourse is a set of terms and phrases such as ‘efficiency,’ ‘adjustments,’ ‘competition,’ and ‘corrections’,  all of which are used to serve the same economic principles - principles that support efforts to reduce public expenditure, to increase lay-offs without dissent, and provide opportunities for privatisations throughout the economy. In the words of George Orwell, this political language is used in “defense of the indefensible” and “to give an appearance of solidity to pure wind.”

The liberalisation of the postal service in Ireland is a good example of a public policy issue where the use of this phraseology is commonplace. Under pressure from the European Union to introduce market-based ‘solutions’ to problems that don’t exist, Ireland was legally bound to open access to the postal market for operators other than An Post earlier this year. Ireland has previously allowed the entry of private companies into the market for larger parcels and packages, but this new legislation was supposedly designed to provide for a more open and ‘competitive’ market across all aspects of postal provision. In the first instance, this seems like a reasonable proposition. After all, competition - we are told - engenders increased efficiencies, increased productivity and cost reductions for the consumer. Moreover, in a changing world where the internet is replacing the traditional postal service, surely innovative new business models need to be introduced. However, the arguments in support of liberalising the market last year were based on an almost reflexive assumption that enabling the private sector to enter the postal market was the only way to realise these results. That An Post - a profit making company which provides a universal service in the public interest - could be induced to innovate through appropriate legislation and regulation was never fully discussed. In fact, competition was pursued by the government as an end in itself.

The harsh attendant consequences of this decision - which will include more unemployment at a time when the economy is hemorrhaging jobs, and a reduced postal service for many citizens - were never factored into the decision. The government, of course, claimed that they have ensured a universal service for all citizens in the legislation transposing the EU directive; however, forcing private companies to run a loss on servicing remote routes in rural areas is not realistic in a free-market based economy. In reality, the private company will go out of business and the publicly owned An Post will be forced to pick up the unprofitable routes at more expense, or the tax payer will be forced to subsidise the private companies covering unprofitable routes. The reason for this is simple: there is an inherent tension between a company whose primary goal is a public good (i.e. the delivery of post to all citizens irrespective of cost) and the interests of a private company whose primary motive is profit-making. These ends will not be reconciled in the interest of the general public.

This brings us back to the question of efficiency and the need for competition in the first instance. Is it efficient to break apart a well functioning postal service; cause possibly thousands of jobs losses at a time when we can least afford to; and not be in a position to guarantee that the universal service that we all now enjoy will be maintained in the future? It seems that the government is conflating internal business ‘efficiencies’ that are related to increasing profits for a company by reducing overheads, with collective public ‘efficiencies’ or the provision of a universal postal service for all people simply because it is the right thing to do. Whether increased competition in the postal market will actually enhance the welfare of all citizens is an open question, but the history of market liberalisation in the UK is reason enough to give us pause.

The use of terms that reduce public policy issues to simple economic calculus devoid of any consideration of human behaviour - outside of a supposedly ‘rational’ self-interested human action - is a practice that should be directly challenged by asking a set of different questions about government proposed decisions; questions such as: efficient for whom? To build a better future, Ireland must break free from the self-imposed ideological straitjacket that blinds us to economic solutions in the common interest.

Image top: infomatique.