Saturday, 18th August 2018
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Our View

A Rainy Day Fund

A Pharaoh once had a dream where he saw a green and lush field and in it was a sleek and fat cow.  Then into the field came an emaciated cow who began to devour the first one.  On waking the Pharaoh knew at once what he had to do.  He sent out an order around his kingdom that grain silos be built and that one tenth of all harvests were to be placed there.  For the next seven years the harvest was bountiful and the new silos were quickly filled.  Then for the next seven years the harvests failed and his people began to go hungry.  But because he had planned to plan ahead for such an eventuality there was enough grain in the new silos to keep his people fed. 

Fast forward a couple of thousand years and now we have the Irish Government attempting to do something similar.  They have just announced that they are setting up a fund to put money away for when the economy next hits a rough patch and money will be needed for essential day to day services for the country. This of course all dates back to the crash of 2008 when the economy went into free fall and there was absolutely no money for the Government to have as a cushion and services were cut to the bone. Now that the economy is going through a relatively good period the Government feels that it is right that it develops a slush fund so that it won’t be left with such dire choices again. As an aside it is interesting that the Government, which is right leaning, is accepting the quite leftist view of the boom and bust nature of contemporary capitalism.  Despite the quite sensible nature of what the Government is proposing there are plenty on the Opposition side of the Dail that believe that it is going around it’s economic planning in the wrong way.  Many believe that if there is money available to go into a slush fund then instead of that it should really be ploughed into various problem areas that exist in Irish society.  Areas such as healthcare, education and housing are, as everyone knows, already in dire need of extra funding and some in the Opposition believe that money would be better spent there than in any pie in the sky future rainy day fund.

Even if such a fund were to exist who is to say that this or any future Government wouldn’t use the money for something else, to fulfill  an election promise or to ensure the backing of Independents to prop up a minority Government?  While the idea of a fund for future economic shocks might sound good, how would it work in the real world?  And why isn’t the money being used now when it is needed?  Will the fund still exist when a new Government gets into office?  These are all legitimate questions and ones that need to be asked. 

The world has developed immeasurably since the Pharaoh’s time and setting up a fund to future shock proof the economy isn’t as easy as having a dream and building some grain silos.


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