Bruce Arnold

Critic of Public Affairs, writing about art, theatre, music and politics

The sooner Brian resigns, the better for the economy

Brian Lenihan has put us in an invidious position that cannot last. At a time of great economic crisis he has pledged himself to the crucial job at Finance while undergoing treatment for a most serious form of cancer, its prospective cure rate less than 10pc. However, he has asked that "goodwill" should not impact on "normal political processes". One of these processes is criticism, so here goes.

The emotional revelations surrounding his illness created a huge over-reaction. This was based on an entirely meretricious belief that respect and privacy for the man and his family should prevail over crucial news. The media are not in the business of gentlemen's agreements designed to manipulate the truth. We should not make them. If public figures have private lives it is their business to protect them.

This issue has to be seen separately from human sympathy for the man. It has also to be separated from judgment of his public performance. Such judgment has been confused by eulogies on Lenihan's "masterly" performance as minister and his crucial future handling of the economy. Unless such eulogies stop they will grossly distort everyone's judgment as we apostrophise the man amid the chaos of what he has done and what he intends in the future.

The truth about him, professionally, is harsh. He understands nothing about economics and he heads a department of State that has been starved of high-grade economists who now mainly work outside the public service. He claims to have been on a learning curve about absolute basics at a time when all basic theories and philosophies about running national economies are themselves bewildering great international economists who have spent their lives in the business.

He has certain pet theories and beliefs and is heavily influenced by the politics of each situation. His most pernicious instinct is a desire to side with the most venal groups or institutions in the State, the bankers and builders.

Secondly, he does not understand the dangers for Ireland of being within the eurozone and being on the shortlist of EU countries that may shortly be forced out of that shaky, imploding partnership.

Thirdly, he seems blind to the most obvious economic fact that faces Ireland, and that is its economic dependence on the UK and the US -- both non-euro economies -- as its biggest trading partners and most vital export markets for our indigenous producers.

Lenihan was not directly involved when Ireland made its biggest economic blunder ever, by joining the eurozone, an area with which we did just one-third of our total trade. We joined at a grossly inflated cost to the exchange rate, thereby doing untold damage in terms of borrowing and inflationary expenditure, from which we are now trying to recover. He should have absorbed the realities of this and been governed by them. He is in fact governed by the opposite: an abject, misplaced respect for the European Central Bank and a totally illusory belief that the euro and the EU are a "saving grace" for this country, the way we used to believe that the Holy Ghost favoured us above all other nations in the world.

Respect for the ECB has spawned parallel respect for the banking system in Ireland. This is mistaken and will cost the taxpayer a huge debt without producing the recovery that Lenihan blithely promises. He is given to such outlandish prognostications in part because he does not understand the realities behind what he says. This will also cause him to change his mind when it suits.

Fourthly, in budgetary terms, he has committed us to a strategy of cutting expenditure instead of broadening taxation. This will deaden initiative and investment and has already produced an envy culture among workers. His approach is like that of Wilkins Micawber: something will turn up, like a revival in the building industry or a sudden splurge of bank investment in new, job-creating enterprises.

This will not happen. Experienced economists know this, though in keeping with the trends around the world, they have mixed solutions. We are in a liquidity trap and exhortation from the minister, combined with spurious promises about having "turned the corner", will not overcome the innate current fear of spending. If governments cut expenditure, so do ordinary people. The general result is deflation and recession, leading to slump, with job losses as well.

Lenihan has no doubt. It is a frightening capacity in any politician. It is widely expressed by members of this Government. They are infected by an over-confidence designed to counteract political unpopularity rather than address the day-to-day problems of the Irish people.

Its latest expression is over the cold-weather chaos that has revealed the unprepared ineptitude of local authorities. They cannot get the grit, the shovels, the spades and brushes to clear ice and snow from pavements. Call in the Army! Ordinary walking in towns is unsafe. Streets are nightmares where people fall and break their arms, or worse.

The floods were the previous example of stupid planning leading to building in flood-prone areas. The idea that Environment Minister John Gormley will co-ordinate fighting the cold is laughable.

Lenihan's lack of doubt was massively inept over the disastrous guarantee he gave to bank creditors and bondholders.

It was the product of the "bubble thinking" that brought the creditors into Ireland in order to make fast money here, which they did, and were then guaranteed no loss. The UCD economist, Morgan Kelly, one of the best in the business, has just published a brilliant paper on this. The prison of the euro, allowing Irish banks to get their hands on unlimited money cheaply, led to grossly irresponsible lending, now to be repaid by the taxpayer.

Kelly says NAMA will push the country beyond the fiscal limits and will need a subsidiary support structure requiring more tax. I hope not, but either way this is the product of Lenihan's over-optimism and his limited grasp of the briefs so ill-prepared for him by what seem to be a poor back-up team of economic advisers who go along with his facile policies.

He should resign: the sooner the better. Misplaced sympathy for his truly unfortunate state of health has nothing whatsoever to do with this case.