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A Grand Bargain?

This article particularly clearly sets out the two main choices facing the in addressing the fiscal crisis. McHale argues for the Type 1 adjustment that favours cuts over taxes and believes, rather touchingly, that this can still be delivered through social partnership.

from The Irish Economy by John McHale

Is there a better way? With a large tax-led adjustment as the default, is it possible for a union-supported “grand bargain” that is better grounded in what we know about successful fiscal adjustments?

I believe this would be a more modest Type-1 adjustment combined with a well-specified medium-term fiscal consolidation plan. Interestingly, this is likely to have a good deal in common with Ireland’s successful 1987-89 adjustment.

I have no illusions about how politically difficult this would be in the poisoned aftermath of the pension levy. However, the impressive NESC report gives some reason for hope, especially its emphasis on the power of shared understanding.  Link to article

Posted in Money Systems, News, Site Value Tax.

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By Emer – March 15, 2009

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