Opinion

Parties have less influence than they think on economy

Patrick Murphy

Patrick Murphy

Patrick Murphy is an Irish News columnist and former director of Belfast Institute for Further and Higher Education.

We are living in a global economy, over which our political parties have no influence - China has been the main global driver in recent years. Picture by Mark Schiefelbein, Associated Press 
We are living in a global economy, over which our political parties have no influence - China has been the main global driver in recent years. Picture by Mark Schiefelbein, Associated Press  We are living in a global economy, over which our political parties have no influence - China has been the main global driver in recent years. Picture by Mark Schiefelbein, Associated Press 

WHATEVER you do, don't take any of the forthcoming party election manifestos too seriously.

No, we are not suggesting that political parties, north and south, may promise more than they can deliver (heaven forbid) or that they might somehow be incompetent in government (well, not much.)

The reason for the advice is that most election pledges depend largely on a healthy economy, which allows governments to fund their pre-election promises.

This requires an accuracy in forecasting, not normally associated with modern economics.

Despite what parties might promise, their influence over the economy is increasingly limited, for three reasons: global economics now significantly determine national economies; many governments are subservient to international financial and business interests; the world's economic future is highly uncertain, even in the short term.

(Good manners prevent us from making a fourth point - that economics can no longer be regarded as a serious academic discipline. It now appears to be fortune telling for bankers.)

So, we are living in a global economy, over which our political parties have no influence.

China has been the main global driver in recent years, by moving its 1.4 billion people from communism to capitalism (although the new capitalism is largely controlled by the communist party.)

It has brought us low-price consumer goods, from clothing to toys, based on government subsidies for exporters.

(God bless communism.) Internally the country's economy expanded rapidly, which has benefited our dairy and pork exports and influenced world commodity prices from wheat to steel.

Thus the Chinese Communist Party has more influence over the cost of living in Ireland than any Irish party.

But China's great capitalist revolution is now stalled. Its stock market has crashed twice in six months, reducing world oil prices and threatening the economies of Australia, Russia, Brazil, Chile and Korea.

President Xi Jinping has even devalued the Chinese yuan to reverse the economic decline.

(Meanwhile, Stormont's Jonathan Bell is promising to grow the economy without any obvious policy. President Xi will be so pleased.)

While the world nervously watches China's performance, many national governments are increasingly subservient to big business and its associated economic influence.

Just 62 people now own half the world's wealth.

(Unless your election candidate is one of those 62, he/she will have limited influence over your future well-being.)

One per cent of the world's people now own more than the other 99 per cent combined.

Ask the parties what they propose to do about that.

Economic inequality has never been greater, which is why so many in the US are abandoning conventional candidates for the likes of Trump on the right and Bernie Sanders on the left.

The growing gap between rich and poor is evident across Ireland. In the south last year 1.4 million people, including 440,000 children, were unable to afford adequate food, heating or clothing. In the north 100,000 children were in poverty.

At the same time, Apple paid an estimated 2.5 per cent corporation tax in Ireland, which brought complaints from President Obama, but not Enda Kenny.

So who governs Ireland - Apple or the Dáil? This model of low-to-no tax has become Stormont's economic ethos, presumably on the basis that the global economy (and President Xi) will look after us.

Economists are divided about whether the world is facing another recession. Bank of England Governor, Mark Carney, last year forecast a rise in interest rates, because the global recession was ending.

Six months later, he changed his mind. (Maybe he misread the bank's astrological charts.)

So how can any candidate promise anything on the economy?

The five executive parties are cutting 10,000 public sector jobs. They hope that the world economy will be sufficiently buoyant to drive foreign investors here to create thousands of private sector jobs.

It is a gamble which not even Mark Carney would take - and we can no longer rely on the Australian economy accepting our young emigrants to control our unemployment figures.

While your election candidate, if successful, can partly influence the direction of public spending (particularly in the south) he/she has no influence over the price of food, energy, transport, clothing or housing.

The cost of living is now largely beyond political control, as the economy becomes a spectator sport for most governments.

Both forthcoming Irish elections, we are told, are about bread and butter issues.

So when candidates arrive at your door, ask them what control they have over the price of bread and butter.

If they are from the Chinese Communist Party, they will probably know the answer. Most of the others will be unlikely to even understand the question.