eye on the economy


Sean Lemass, Taoiseach (1959-66), pictured here with Hugh McCann, secretary at the Department of Foreign Affairs (1963-74)


cuts, although one felt some were finding it hard not to. Instead, there were pledges to reverse some of the recent tax rises or exempt certain groups or levels of income. There was some delicate fencing over property tax, with parties hoping to damage each other while not drawing too much attention to their own position on the issue.


Promises, promises With public attention focused on all of this, the politi- cians probably got away lightly over the downgrading of Irish bank bonds by Moody’s, the credit ratings agency. This reduction to ‘junk’ status was based explicitly on the campaigning by the opposition parties to have senior bondholders carry some of the losses in the banks. As with tax versus spending, there is an important


argument to be made over ‘burden sharing’. But no one could claim it was made in any intelligent fashion dur- ing the campaign. Instead, the impression was given of a possible sudden, imposed default on senior bonds not long after a new government took office. The downgrade should have


been a reminder that there are costs associated with any policy, and the size of the costs depends to a large extent on how the policy is implemented. Nor should we assume that foreigners see Irish politics


with the same world-weary cynicism of many, if not most, of the locals. Even if they do, a ratings agency may not be able to factor in the Sean Lemass dictum that all election promises are void after polling day; rather than taking political statements at face value. Politicians everywhere understand the pressures of


elections. But they know – and the IMF knows even better – that public resistance to austerity pro- grammes builds up as they progress. Their concern clearly was that growing public anger might force the new government to stick more closely to its promises than its members may have intended. A Lemassian view of past Irish political history would


see the new administration resuming a common approach with the EU towards the resolution of the banking crisis and discovering that the fiscal situation is so dire that there is no choice but to follow the


Spring 2011 Irish Director 19


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