Spats between Lenihan and economists becoming too taxing

Only half-joking, a friend last week wondered aloud whether the Government could be persuaded to impose a tax on economists. He'd even sketched out the revenue-raising potential of the scheme in some detail. The new tax would work like the super tax some governments in the past levied on the windfall profits generated by unpopular petrol companies. Only this time the tax would help cool what the friend saw as a new dangerously inflated market - economists commenting and writing on the banking and economic slump. The friend was convinced that, unlike most taxes, the new tax would win widespread public approval. He was also sure that Minister of Finance Brian Lenihan, following his spat with economist-turned-commentator David McWilliams, would be among its strongest advocates. The finance minister has made it known he favours cutting spending, not increasing taxes, in next month's budget. But my friend was certain the minister would make an exception for the new tax-an-economist scheme. The revenues raised could even help restore some of the bounty the Government has lost from the once high-yielding transaction taxes, like stamp duty on house purchases. The tax would be levied each time an economist analysed or wrote a prescription on the recession. As the friend said, there was a no shortage of economists and controversies involving economists, and no shortage of their commentary on the economic hard times. He has a point. Minister Lenihan's run-in with McWilliams was about who said what over a south Dublin kitchen table late one night during the crisis of September before last. McWilliams, in a new book, related a tale of Lenihan seeking and listening intently to his, the economist's, confidential counsel, as the minister unpeeled and consumed a clove of garlic for its health-giving properties. Last week, taking sides in the minister v McWilliams face-off, Jim Power, chief economist at Friends First, accused the economist of breaking confidences. Speaking from the prestigious Ceifin conference in Ennis, where serious matters like leadership and recession and recovery were under discussion, Power said that McWilliams' decision to write about the kitchen summit was "despicable". Lenihan has survived previous maulings by economist. In January, Morgan Kelly, the UCD economist, claimed the Department of Finance, as it prepared the previous September to introduce its debt-and-deposit guarantee for six Dublin banks, had contemplated letting Anglo Irish go to the wall. Lenihan, in the Dail, strongly refuted the professor's claim. The year's other top economic controversies and spats have mostly involved economist sparring with fellow economist. Last month, Pat McArdle, recently retired Ulster Bank Group chief economist and former Department of Finance official, now turned Irish Times analyst, at the annual session in Kenmare of the Dublin Economic Workshop, verbally jousted with Kelly. Reportedly the "furious row" came as economist McArdle took exception to what he considered to be economist Kelly's intemperate remarks on the fragility of the Irish banks. Kelly said he knew what he was talking about because he had long predicted the losses that would flow from the banks' reckless lending. Economist McArdle believed that loose economist talk would drive up sovereign interest rates and cost the economy. Appropriately, the economists' big spat took place at the year's biggest gathering of economists. Commenting on the Kenmare clash, Limerick University economist Stephen Kinsella, a critic of the National Asset Management Agency (Nama), rhetorically asked whether economists were bad for the economy. He wondered whether officialdom was set on silencing fellow Nama critics, like Brian Lucey. Lucey, the Trinity College professor and economist, and Karl Whelan, the UCD economist, are the public faces of the academic economists' revolt against Nama. They have been engaged in near mortal combat with the Department of Finance for the best part of the year. In August, they were among the 'Nama 46' economist commandos who signed a petition opposing the bad bank agency because they argued the taxpayer was getting a raw deal. A lively discussion then took place among their own group of 46 whether the 80, 100 or 200 academic and professional economists, who had not signed, favoured Nama or were quietly fellow Nama dissenters. At the time, astute commentators said that, not so long ago, the nation, in its innocence, would have been surprised to learn there were as many as 250 economists working in the profession. John FitzGerald, the head economist at the Economic and Social Research Institute (ESRI), may have detected a similar public weariness with economists commenting on the economy. He said on the radio the other day that listeners were probably anticipating the time when they would remark on not having heard any economist pontificating on the economy for a full week. I suspect it was FitzGerald's comments that gave the friend the idea of imposing a tax on economists in the first place. But the friend should not be encouraged. He is, unfortunately, thinking up new taxes on non-economist commentators who regularly pop up on the television and radio commenting on the economy. The friend notes that, even without fiscal intervention, the market for commentators urging fellow panelists to talk up the economy has pleasingly thinned. But, says the friend, some commentators still insist on endlessly repeating phrases like "we are where we are" as their way of indicating that it's time to stop debating Nama and the bankers. "Anger is not a policy," was sharp when Colm McCarthy, the economist and An Bord Snip chairman, coined it first. Constant repetition by others is in danger of becoming just too taxing, adds the friend.