Here’s an admission. I’m in debt. Up to my (insert whistle here). We’re talking a six figure sum.
Now the questions is: is this good or bad?
The answer is: you don’t know because you are missing two vital pieces of information. One, can I make the monthly repayments? And two, does my assets exceed my liabilities?
Just for the record the answer to these two questions is yes, so the bailiff’s arrival is not imminent.
I mention all this because Fianna Fail have just announced the most dimwitted policy ever to be put in front of the Irish people. They have said that if they are elected back into government that they will eliminate public debt. (And, might I say, it is thoroughly dishonest).
Let’s think about how stupid this is. Imagine if all the people in Dublin waited until they had saved up enough money before they bought a house. Where would they live? How would they mind their children? How would they accumulate assets that people need to secure their future?
Imagine a young lad who is offered a job out of his area. Should he forego the opportunity just because he wants to avoid a car loan? Even if the job will pay for the car? It’s a total nonsense.
Now let’s look at the national picture. If Fianna Fail have their way our children will have to sit in overcrowded classrooms, our sick will have to sit in overcrowded A&E rooms, our housing estates will remain bleak wastelands. All because we don’t want to borrow money. Money that will pay for itself over time. This is utterly daft.
Our broadband infrastructure is amongst the worst in Europe. We could borrow a couple of billion euro and put a fibre optic cable into every house in Ireland. It would benefit every home, child and business and pay back for itself a hundred times. But we won’t do it because we don’t want to borrow money. A completely crazy policy.
And there are hundreds of other examples. Providing facilities for drug users is a no-brainer in terms of crime reduction. But we don’t have the money.
And the dishonest thing about this is that Fianna Fail are clever enough to know that avoiding investment will eventually ruin Ireland. They plan to have the investment all right, but they plan that it will come from their friends in the private sector.
So huge swathes of Irish infrastructure is being handed over to the private sector in PPP arrangements.
An example of this is the motorways. Private companies are being asked to finance and build these new roads. So the cost doesn’t appear on the national accounts. Nice trick. But every year Irish people pay millions of euro on tolls to compensate for this ‘debt-free’ situation. It’s a smoke-and-mirrors job.
The vast majority of people go into debt because it makes perfect sense to do so. The critical thing is to borrow sensibly so that the loan can be maintained and will pay for itself in the end.
That’s common sense. The only sense that Fianna Fail is talking is nonsense.