EDITORIAL : THE INDEPENDENT, IRELAND

We have reached our tipping point

Unlike Neil Armstrong's 'small step for man, but giant leap for mankind', last week's employment initiative was -- even before the pensions furore erupted -- one small step for everyone. We should not be too dismissive about decisions such as cutting the VAT on hairdressing, for one good hairdresser adds more to the sum of human happiness than a thousand lawyers. But hairdressers aside, Mr Kenny's little initiative did at least serve to indicate just how serious a fix we are in.

Michael Noonan's shifty raid on private pensions revealed that the State has finally reached the point where it must cannibalise the private resources of its citizens if it is to survive. The Coalition did attempt to ameliorate the impact of its furtive swoop by putting a cap of four years on the tax. But the intrinsically permanent nature of all new taxation is epitomised by the claim that the imposition of income tax in Britain to fund the Napoleonic wars would be a temporary measure.

And make no mistake about it, the desperate decision to put the State's hand into your pocket is only the start of it. No one should be under any illusions about the certainty that the Government will be putting its hand into your savings on an ever-more frequent basis to fund the reparations that their predecessors ceded to our brutal ECB overlords.

The ECB's amoral reduction of our citizens to the status of mere economic units that must be bled to feed the interests of German bankers explains why Morgan Kelly's economic stance has been so seductive. But whilst no one would blame this heartsick country for wanting to exact a similar revenge on our dissembling European 'partners' to the one that which we dished out to Fianna Fail, Mr Kelly's cure runs the risk of being worse than the disease.

It is excessively blasé, even for an academic economist, to advocate solutions involving the future of millions of our citizens whose chances of success are little better than betting on the flip of a coin.

One of the realities to which governments must succumb is that whilst wars are generally popular at the beginning, they should never fight battles whose outcome is uncertain. But whilst caution is a political virtue, our administration needs to wake up to the fact that when it comes to resolving our woes, we are becoming pressed for time.

The current cautious approach to reform is confusing immediate survival with long-term sustainability. If the Government is not careful, the sort of modest proposals which appear to provide us with a safer course will create the same scorched earth that ministers claim Mr Kelly would land us in. Happily, amidst this uncertainty, some hope was provided by the ESRI's quarterly report.

Although RTE called it "radical", the suggestions that we should cut our spending to meet our measure and raise the taxes we need in the short rather than the long term were logical. It might still not be enough, but if we do that which we are supposed to do and we are still sunk by the banking crisis, Ireland will have a moral case for some form of burden sharing on our banking front.

Moral force in the face of an over-mighty Germany is a weak argument. For now, however, outside of a return to real growth, and that is the game changer everyone from the ECB to Mr Kelly appears to have forgotten, the politics of Gandhi appears to be the only option we have.