10 Lessons

26th February, 2009

Just came across a remarkable document. It is called ’10 Lessons About Budget Consolidation’ by Jens Henriksson. It is published by the Brugel Institute and is available here. It is written by one of the chief economic architects responsible for Sweden emerging from a financial disaster in the 1990s to the sound successful economy of today. This is an inspirational read. It shows how public policy can make the decisive difference to turning a country around. As I have said many times before our country has a fine future ahead of it. We just need to make the right decisions to get there. This work offers a guide as to how this can be done.

Few things struck me from this. Firstly, it stresses the need for a ‘grand bargain’ at all times. You must ensure that you are delivering a package in which everyone gains or looses. To express it crudely, if the poor are going to get a bit poorer you must tax the rich. Such a simple point, but so important. How would the public pension levy have been received if it had been part of a grander deal?

Secondly, sound public finances are essential for future growth, or as the article writes ‘the future has no lobbyists’. We have seen this from our own recent history. Getting the public finances sorted in the late 1980s creating the personal and business confidence that allowed everything else to flow from it.

Finally, accountability is essential. The public must know who is in charge. In the office of the Swedish Finance Minister a large screen was erected. You may think it would show Sky News, CNN or Fox (God forbid!). In fact it showed a real time comparison of Swedish bond yields vs German bond yields. I would be comforted if I thought the Taoiseach was doing the same.

Read this article. There is hope. We have a future. Look at how someone else survived and prospered.

Click on the link to download the article: