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Wednesday, 20 October 2010

Serious Mistakes Made...

Mansergh concedes that serious mistakes were made...

THE IRISH public is determined to remain in control of its own affairs despite the scale of the financial crisis, Minister of State Martin Mansergh told leading economists in London last night.

“There is a determination to try and maintain control as far as we can in our affairs, and to avoid – and to do whatever we have to do to avoid – outside dictation either on expenditure or taxation.”

Speaking to Politeia, an economic forum in London, Mr Mansergh readily conceded that serious mistakes had been made by governments over the last decades.

In the late 1990s, public spending controls were eased up, with the number of public employees rising by 50 per cent and the salaries for those in higher ranks by 80 to 100 per cent, sometimes even more.

“I think there is an argument for saying that Irish society, or certainly the upper echelons – whether involved in the public or private sector – did become somewhat greedy when the good times were growing.

“Pay in the middle to upper echelons of the public sector went up a lot more than was justifiable,” said Mr Mansergh.

Acknowledging the scale of public anger and fear in Ireland, Mr Mansergh said “national hubris [has been] replaced by a sentiment sometimes expressed as ‘call in the IMF’, or even hand the place back to Her Majesty or, worst of all, ‘put the celebrity economists in charge’.

“The effect of the crisis, where domestic and international factors compounded each other, came as a large shock to a country that was convinced not only that it was doing brilliantly, but that it had been operating well within the margins of safety.”

Many now claim to have foretold the crisis, he said, but the record does not bear them out. “I have to say that the property supplements of the media were among the biggest cheerleaders of the property boom.”

He rejected the premise of a question from economist Irwin Stelzer, who said some IMF research clearly showed that countries that rapidly cut public spending go into an economic spiral.

The IMF, he said, has changed “from what it was” under the leadership of Frenchman Dominique Strauss Kahn who, he noted, was a possible Socialist candidate for the French presidency.

Former finance minister Charlie McCreevy’s declaration that “when we have it, we spend it” would not win economic prizes, he said, “but very fortunately he did not entirely act on it” since he created the National Pension Reserve Fund.



Report by MARK HENNESSY - Irish Times.

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