Peter Connell: Writing in last Saturday’s Guardian, Ian Jack, bemoaning the irrelevance of the current party conference season in the UK, argued that the media, rather than providing publicity for stage managed political rallies, would better serve society and its citizens by focusing on the powerful institutions and corporations whose decisions shape our society, our economy and our lives. In his piece Jack laments the fact of high levels of economic and financial illiteracy and argues that ‘we don’t understand what controls us’. How can we address what is essentially a democratic deficit? How do we control what we don’t understand?
Given the high level of complexity of the financial system that is an integral part of modern capitalism it is, perhaps, unreasonable to expect that the average citizen will have a good handle on credit default swaps, contracts for difference and ten year bond yields. But that’s not really the problem. The real issue is how is a citizen in a democracy to assess the efficacy of their government’s economic management without some grasp of the context in which decisions are made? The government, naturally enough, have claimed credit, for renegotiating the terms of the EU/IMF bailout that will see a significant reduction in the country’s debt burden on the back of a 2% cut in the interest rate. It’s fair to say that most reasonably well-informed citizens will assess this claim in the context of the Minister for Finance indicating in early June that a 0.6% rate cut might be the best that could be hoped for. Very often, though, it’s much more difficult to make a judgement call.
A good example is the infamous promissory note which, under current arrangements, will cost the Irish taxpayer €65 billion over the next 14 years. Michael Burke, Tom McDonnell and Michael Taft performed a valuable public service when posting on PE on the promissory note and arguing that it should become a major political issue. The nature of the promissory note, the institutions and entities that are party to it and the implications of defaulting on or restructuring it are complex issues on which even professional economists differ. Prompted by the PE posting, a lot of these issues were teased out on irisheconomy.ie. The debate, though, remains one largely between ‘insiders’ when it deserves and demands the widest public audience. Given that the cost of Anglo-Irish/Irish Nationwide debt over the next few years completely dwarfs the gains that will be accrued from the reduced interest rate on the State’s EU/IMF bailout funds, it is an indictment of our mainstream media that it has largely failed to facilitate an informed public debate on this issue.
In assessing how the government deals with the promissory note in the coming weeks the bar needs to be set high. A complete restructuring of the debt, with a rescheduling of payments over a 30 or 50 year period, seems the least we should expect. And the least we should expect from our media is that is that it addresses the democratic deficit and helps us ‘understand what controls us’.
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