It can be said that the Labour party (LP) hit the nail on the head with its plans to democratise the economy. They could not have devised a better electoral catchphrase. Though it has been branded around for many months, it remains the hinge on which their campaign will revolve and hopefully swing them into parliamentary majority. Doubtless, economic power is concentrated in a few hands in Mauritius, those same ones which hold the keys of all the doors to development.

As good as democratisation of the economy sounds, its implementation still resides in the abstract world. No measures are yet to be announced, detailing how a Labour government will make this grand project a concrete reality. Or to put it in the mumbo-jumbo world of political euphemism, the action plan is missing. However, in an interview with this newspaper, Rama Sithanen, the financial adviser of the LP gave us a glimpse into the economic thinking of the new champions of the dispossessed.

In the LP?s logic, opening the economy to international competition (Sithanen?s exact words), and encouraging an entrepreneurial attitude will put everyone at par with today?s financial elites. There is nothing radical in this. Such policies could come straight out of a World Bank or IMF handbook for the third world. But they closely resemble Ireland?s economic model.

Back in 1984, in The Economist?s annual country survey on Ireland, Ireland was christened the ?poor man of Europe?. Fast-forward 20 years and the Irish are the third richest EU nation after Norway and Luxembourg. As economic miracles go, this was one of a kind. The only countries in the midst of such a boom, at the time, were in Asia, earning this period of Irish history the nickname ?Celtic Tiger?. Wealth was generated through the same strategy that Labour is espousing. A neo-liberal order, which gave the multinational corporations favourable terms, brought unparalleled prosperity to Ireland.

<B>In spite of wealth</B>

However, the miracle came at a cost. The 2004 United Nations Development Programme (UNDP) report shows an alarming level of poverty on the island. 15.3% of Irish people live in poverty, the worst record in the western world after the US at 15.8%. The disparity between rich and poor, which demonstrates a country?s ability to redistribute wealth (or democratisation of the economy), is wide.

Although Ireland comes 10th in the UNDP report (Mauritius is 64th out of 177 countries), it is still plagued by poverty. According to the CORI (Conference of Religious of Ireland) Justice Commission report 2004, 1 in every 4 households and 20% of the population were living in poverty. Ireland?s newly acquired opulence clearly did not benefit everyone.

Furthermore, the Irish government displays the worst parsimony in the EU when it comes to social security. It allocates merely 14.1% of its GDP to national social protection while Sweden gives the highest at 33%. The country just above Ireland?s last place is Spain, which still manages to allocate just over 20% of its GDP to social welfare.

Switch over to income distribution and the landscape remains harsh for the less well off. In 2000, the top 10% carried off 25.9% of the total income while the poorest 50% took only 23.3% of the earnings. Also, the households in the top decile had 11 times the disposable weekly income of those in the bottom 10%. This has created a schism in Irish society, with some super rich and others very poor, a situation which would not be unlikely in Mauritius. From 1987 to 2000, the gap between the rich and the poor widened despite the ?Celtic Tiger? phenomenon.

<B>The dangers of foreign competition</B>

When it comes to health, Ireland again shows a stubborn reluctance to spend money. According to the UNDP table, public spending in 2001 was 4.9% of the GDP, the lowest among the industrialised countries. By contrast Norway spent 5.9% of its GDP on public health while Sweden and Germany were at 7.5% and 8.1% respectively. It is no wonder the Scandinavian countries scored high in the HDI (Human Development Index) of the UNDP. They have managed to design socio-economic policies that have both generated wealth and protected those at the bottom of the ladder.

On paper, opening the economy to foreign competition sounds like a good idea. The theory goes that eventually prices will drop as businesses fight against each other to attract clients. In this way everyone is happy: the consumer pays less and the companies make their profits. So, in the 60s, Ireland lifted all protectionist tariffs and allowed foreign firms in. What happened in the next 40 years would disprove the happy-ending myth of neo-liberal economy. Today, Ireland is one of the most expensive countries in the EU, and the end of protectionism ruined a range of indigenous companies in the country.

Attracting foreign companies also means that the government will have to provide incentives. Both Ireland and Mauritius have favourable tax regimes, where profits can be freely repatriated. This gave rise to the anomaly of a GDP larger than the GNP, meaning that a sizeable part of the economy depends directly on foreign investment. Subsequently, sizeable sums are shifted offshore rather than invested in health or social security.

A certain democratisation of the economy is overdue in Mauritius. But Labour?s proposition is what the WTO or the IMF already has in store for the country. And these measures, if followed blindly, can exacerbate existing inequalities in society. There is a real need to protect those who will be undeniably left behind in a cut-throat and competitive environment and develop solid local companies.

If politicians really wanted to improve the world, creating equal opportunities, they would never treat us as gullible fools, good only for rabble-rousing catchphrases. But for the power hungry, politics becomes the art of vote extortion.

<B>Diren valayden</B>

Outlook Correspondent in Dublin