Herd thinking

As is well known our economy is in a critical condition. Unemployment is soaring, the tax take has plummeted, manufacturing and construction is dead and state cuts are swept around the country.

There seems to be a complete lack of vision to actually;

1) face up to the problem
2) accept that radical solutions will be needed.

Now a radical solution, in my book, is not to rip the arse out of the domestic economy to the extent that your average citizen is terrified to even buy a hardback book for fear they may need that extra few bob in a few months time. A solution focused on jacking up taxes and cutting expenditure is not new or radical its a copy of policies that failed in the 50's, 70's and 80's.

I believe the core reason why is that the Government, under ex Finance Minster Cowen, are far too understating point 1 to even look at point 2. Simply put Fianna Fail are too busy introducing policies that seek to deflect blame than confront the scale of the challenge.

In today's Irish Independent, economist and columnist David Mc Williams had a provocative article on ditching the Euro for a new Irish currency. His main argument is that we are then in a position to devalue and some make our exports cheaper and hence more competitive.

The reaction on various on-line forum has been hostile. This hostility expressed in the appartnely closing argument of "do we want to end up like Iceland". To me the most important point from Mc Williams is not so much the merits of leaving, or sticking with, the Euro but his criticism of the Shibboleths or conventional wisdom that, seemingly, cripple Irish political and economic thinking.

And its the reaction of these Internet fora that only goes to compliments Mc Williams core argument. Conventional wisdom is that Iceland is in a even worse condition than Ireland.

So I had a look, and guess what, Iceland's unemployment is lower than ours, its not in a deflationary cycle, its exports is up, its economy is actually growing and wages are slowly rising.

In short Iceland's economy is in full recovery mode. We, on the other hand are at least 16 months before bottoming out, at which stage the impact may well have destroyed the country.

The one thing we have learnt over the past 12 months is that the unthinkable soon becomes the obvious.

Oh and Iceland's government resigned before the recovery took hold!