The Irish Economy
Commentary, information, and intelligent discourse about the Irish economy
All ‘governments’ – whether democratic or undemocratic (a relative categorization) have their appropriate forms of taxation and welfare distributions (entitlements) – to ensure their continued popularity with their respective supporters. Makes ‘good’ political sense but perhaps not such ‘good’ economic sense (again a relativistic categorization). Its just the way of things.
Now any attempt to dilute or to remove the aforesaid entitlements will certaintly beget some trouble. The lower-orders will demonstrate on the street, the upper-orders will demonstrate in the minister’s office. Yes, the upper-orders do have their entitlements, which they also cling to with Limpit-like ferosity. Now, what did that man say – “Its not what you do – its how and where you do it!” or some such comment.
Lord, Sir Henry Kissinger, CIA, NSA, KGB (honorary), put it somewhat succinctly (1963) –
“There are two kinds of realists: those who manipulate the facts and those who create them. The West requires nothing so much as men able to create their own reality.” And quite rightly so, Sir Henry.
Anyhows, I’m expected to be ‘whelmed by the shock and awe of a reduction in the USC. Quite so.
I don’t think people realise just how extreme the politics of people such as Ruth Coppinger, Joan Collins, Paul Murphy and their fellow travellers is. These people do not agree with certain fundamental tenets of individual freedom and property which are common to most Irish people.
My view is that the threat form such extremists is very serious and that the main-stream parties need to focus on delivering improvements for the impoverished and disenfranchised to head off the threat to political and social stability posed by these extremists. The politics of division being pursued by Fine Gael, and the framing of the general election as “us versus them” is not helping matters.
Labour and Fianna Fail would traditionally be forces for moderation and social justice, but both have been severely damaged by the policies they have had to subscribe to in the economic crisis. If parties such as Labour and Fianna Fail cannot deliver improvements for their traditional working class base then extremists will rise ever stronger. Labour and Fianna Fail need to come out with strong policy platforms with concrete measures in order to stay relevant.
The concluding sentence of the article reads:
“Preventing financial crises also means reducing the probability of a political disaster”
Well, that depends on how the financial crisis is prevented, doesn’t it?
It is very easy to prevent a ‘financial crisis’ in the short run, by shutting off lending and collecting debts, regardless of the price of collection–pretty much what has been happening in most of Europe since 2008.
The threat of immediate ‘financial crisis’ is apparently removed, but as economies fail to grow or stagnate, due to a creditor inspired deleveraging policy, wider economic and social instability pose further threats, even eventually to a mega economic crisis.
Preventing financial crisis should neither be an end in itself nor should it be the predominant aim of economic policy. There are deserving parties in society at large other than creditors.
Ireland needs to build at least 20,000 houses per annum over the next ten years, costing roughly 5 billion per year, a total of 50 billion over 10 years.
As property laws stand it is quite conceivable that existing land-owners will garner at least 30% of that €50 billion-approx €15 billion, making many into multi-millionaires; and all as a result of a piece of paper from the State granting permission to build on that ‘private’ land.
In so far as Ruth Coppinger, Joan Collins, Paul Murphy or indeed anybody opposes such enrichment, by virtue of the enhancement of existing rights on the properties of a small minority, paid for by future generations of the majority of citizens, then they will have a great deal more support that you will wish for.
The quality of a democracy is the quality of the public discussion.
This tim€ is diff .. €r.. €nt!
“and all as a result of a piece of paper from the State granting permission to build on that ‘private’ land.”
People generally pay for land with money. Development land is subject to capital gains tax. It was previously subject to stamp duty at 9%. If it is inherited it will have been subject to capital acquisitions tax.
Coppinger et all want to forcibly take 100% of wealth from people above a certain point and to redistribute that wealth. They are essentially communists.
In general however, I agree that Coppinger et al will get their way unless the system is made more fair.
By the by, the price of land is not a major inhibitor to construction at the moment and nor is it determinative of house prices. Rather the price of houses is determinative of the price of development land. The price of houses will always be what the market can bear. Ironically, when land was at its most inflated and expensive we had more houses being constructed than ever before. The Central Bank Rules are the most effective measure yet to reduce the price of development land.
There is land available relatively cheaply at the moment. Some of it is already in the hands of people who are anxious to build houses. There are large swathes of land in Dublin which would be developed if the planning process in Dun Laoghaire Rathdown was more effective.
“As a consequence, regulators and central bankers carry a big responsibility for political stability when overseeing financial markets.”
And we are in uncharted territory. Euro rates to go further negative, for example.
Who shall be happy ?
“Eurozone decision-makers will never agree upon the changes needed to prevent future crises unless they agree upon the basic facts that explain how the Crisis got so bad and lasted so long.”
This is a very sad reflection on European decision making.
Look in the mirror – and google your self!
BTW I cannot comment on Paul Murphy …. methinks the Murphy crowd were blocked from this blog; not a single comment from A Murphy since its inception. Must be something up … Ruth Coppinger hangs out with ‘Honest Joe’ Higgins whose brief Q&A with the The Guv’nor Emeritus resulted in the best summary of the ‘krisis’ to date; and Ruth is no slouch with the sharp realist sabre herself …
But Joan Collins! Shur Joan scared the bejazus out of your pal and beloved Bart Ahern on live TV and all Bart could come up with were his usual ‘cribbin’ an ‘moanan’ oul whimperin. Yeah. No doubt about it – Joan scared the livin bejazus outa Bart. Blind Biddy took tea with Joan recently … Scary!
Meanwhile, the retro-fitting of the euro sovereign-banking nexus continues (without evidently being much influenced by, or concerned about, whether a consensus among economists on the causes of the euro crisis exists or not).
“Labour and Fianna Fail need to come out with strong policy platforms with concrete measures in order to stay relevant.”
Agreed up to a point.
It is more important, however, for FF to defend their record in government over many decades.
The current FF leader seems to have no desire to do this and simply wants to erase all memory of the 1932-48, 51-54, 57-73, 77-81, 87-94, and especially the 97-2011 FF-led governments. He pretends that FF is a completely new party and unrelated to the one that was in government for 60 years. As well as making FF indistinguishably liberal from FG and Labour on social issues (throwing away the votes of rural Ireland in the process), he never ever defends the economic record of previous FF-led governments. He is completely ineffective as today’s IT poll shows. He should be replaced asap.
It is now clear that the biased media and academia view that FF left behind a totally broken, ruined, and destroyed economy in 2011 was a hoax (as I said at the time). There was indeed a serious recession (the worst since the 1930s) during the last few years of FF’s reign (2008-2011). Big deal! Virtually every other country in the developed world had a similar recession. Many are still in it. The fall in output in Ireland during this recession was just marginally greater than the OECD average (the growth having been miles above the OECD average during the preceding 20-year boom). The view that the economy remained fundamentally strong and ready to bounce back once global conditions improved (a view derided by the media and academia at the time) has been proved by subsequent events to be true.
Then, there is the matter of housing. The FF government was given dog’s abuse for building a large number of houses. This criticism looks a bit weak now, given that there is a growing housing shortage. If FF actually left behind 350k empty houses in 2011 (as the media claim), then where are they and why are house prices now rising so fast? The reality is that Ireland’s population grew by almost 1 million between 1997 and 2011 and this is why so many houses were needed. House building just about kept pace with population growth for most of the period 1997-2011. There never were 350k ’empties’. It was a hoax. In 2012 the CIF put the figure at 30k and they’ve been proved correct.
Throw in the false emigration estimates for the years 2008, 2009 and 2010 that ESRI published just before the last election, which I ridiculed here at the time and in which I was proved totally correct when the 2011 census was published. The reality is that taking the period of the last FF government in its entirety (1997-2011), Ireland had net immigration of 400,000.
The economy and society that FF built over many decades is currently characterised by high-enterprise, high-growth, job-flexiblility, relative demographic strength (in comparison with the rest of Europe), and social cohesion. This is in marked contrast to most other European countries that are today characterised by economic stagnation, unprecedented population ageing, demographic collapse, and now internally-generated Islamic terrorism. France is in a state of war, Belgium is shut down, Sweden is wracked by riots, Finland is in a depression with no end in sight, Italy and Portugal are economical dead haven’t grown at all since 2000, Greece is in meltdown, Germany is in such a demographic downward spiral that they’ve resorted to inviting ISIS to fill the gap left by their lack of young people. Compared with these, Ireland is looking pretty good (as Apple and Pfizier would confirm), FF need to start claiming credit for this, rather than (as the current leader does) giving priority to being patted on the head by the Irish Times for his espousal of liberal ‘values’.
The Irish Fiscal Advisory Council has published its latest assessment.
The Council deems the 2016 Budget in line with the SGP requirements, although pointing out that the economy is growing rapidly and does not require an additional boost. IFAC is not happy about the €1.5bn increase in spending in the final months of 2015, although the Expenditure Benchmark only applies to Ireland from 2016. The Department of Finance does not seem to have adjusted its 2016 GDP forecast for that stimulus.
IFAC also points out that the published medium term fiscal projections, showing a substantial trend decline in expenditure as a share of GDP, are not consistent with the known demographic pressures on spending and broad political commitments to cut tax rates.
The perennial Potential output issue is also discussed, as Finance assume that the economy will operate about 2.5% above potential for the next few years, which appears inconsistent with other indicators, such as wage pressure, price inflation and the BOP. Estimates of the Output gap differ and IFAC puts forward its own, although it shows Ireland running a positive output gap for a full decade up to 2008, which appears odd if not impossible .
Perhaps the most important sentence in the cogent article by John McHale in today’s IT is the following.
“The Government’s own system of multi-year expenditure ceilings has also been ineffective, with continuous upward revisions to the ceilings.”
In short, neither the body politic nor the electorate have drawn the required conclusion from the crisis i.e. if you wish to increase expenditure in one area without increasing the overall level of expenditure you must cut somewhere else. This implies a willingness to examine not just increases in expenditure but the pattern of, and justification for, existing expenditure.
Sweden drew the necessary conclusions from a much smaller banking bust in the 1990’s.
We seem set on proving the contention by Mary Harney in a – probably inadvertent – pertinent comment some many moons ago that Ireland is “nearer to Boston than Berlin”. Courtesy US FDI, it may actually be true.
The statutory activities of IFAC (the “comhairle comhairleach” in the first official) are rapidly becoming part of the flummery and meaningless ritual that the Government intended when it established (under some external duress) the optical illusion of “independent” assessment of fiscal policies.
The contempt with which it holds the IFAC was clearly illustrated when it failed to convey to it that it had secured the agreement of the European Commission earlier this year to its €1.5 billion expenditure splurge. The Chairman was made to look pretty foolish when he discovered and criticised this splurge last month. The IFAC was forced to row back pretty sharpish.
The key issue here (which most mainstream economists for some reason are reluctant to concede) is that when governments spend they create money out of thin air ( in the same way that banks create money out of thin air when they lend). Taxation, the shuffling of revenue and expenditure and borrowing are all post hoc activities to give an impression of “balancing the books”.
But governments in the EZ currency, not monetary (h/t CMcC), union which increase spending are increasing the issue of the currency all mebers use. Therefore there has to be some semblance of central control of members’ fiscal policies. And this is where the EU’s fiscal compact, two-packs, six-packs, semesters and all of the other gimmicks come in. However, the Commission has considerable discretion in apllying these gimmicks and the major members and well-behaved smaller members will always be cut some slack. The European Commission and most other member-states in the EZ would much prefer to see the current coalition returned to power at the next so a blind eye was turned to this pre-election €1.5 billion expenditure splurge – and to any pre-election use of the Strategic Investment slush fund.
But what makes the whole performance such a joke is that the IFAC produces its assessment of the next year’s budget when most, if not all, of the enabling legislation has been rammed through the Oireachtas. It has now become part of the long-established tradition of preventing any effective scrutiny of or restraint on government decision-making before the event or of any accountability after the event.
Your sanguine view on land prices is misplaced.
Mark Twain’s investment advice — “buy land, they’re not making it any more” — has been taken to heart in recent times as land has become an investment class.
The traditional rule of thumb in the UK is that land accounts for about a third of the cost of a house but while there is no scarcity of land in the UK or Ireland, the ratio is much higher in cities aided by measures that create artificial scarcity.
House prices have gone up five fold since 1955 in the UK but the price of development land has risen fifteen fold.
Besides, Ireland has a crazy situation where agricultural land prices are among the highest in the world while the typical farmer is dependent on handouts for 70% of his income.
Check the recent price rises in counties Dublin and Wicklow and that’s before the boom has yet to get boomier — in the words of some forgotten oracle.
The number of land holdings fell 27% in the EU28 in 2003-2013 but strangely the only rise was in Ireland.
Dutch house price doubled in 350 years; Irish prices in 20 years
It’s also strange in Ireland that the CSO gave up trying to track both agricultural and development land prices about a decade ago.
I do not fully understand the discomfort of IFAC with the 1.5 billion additional expense in 2015. Surely this was already known and largely spent at the time that IFAC gave broad approval to the 2016 spending increase.
On the whole matter of GDP growth, Patrich Honohan seems to pretty spectical of value as a measure in terms of a measruement tool for the Irish economy.
“Mr Honohan said Honohan says employment growth may be a better measure of economic’s recovery than GDP, which is distorted by the accounts of multi- nationals operating in Ireland. Employment has been growing by about 2.5 per cent per year, he said.
As an general observation, whether one agrees or disagrees with the IFAC analysis, John McHale is to be commended for his courage and tenacity in attempting to do his job as he sees it. That is good to see.
Are Fianna Fail going to committ to a 1930s style house building programme, that is ungently needed. If they did, they might be going a little better in the polls.
Whichever party goes back to that, they will increase their vote substantially; and it will be FF or SF, as FG has sided unequivocally with landlords of all kinds, particularly favoured landlords, both foreign and domestic.
This article is of interest in the distinction which it draws between ‘natural’ and ‘economic’ disasters and the respective responses of society.In short, people differentiate between disasters to which they can ascribe a particular political or policy fault and those which have to do with natural causes (?)
I’m not so sure about this, since the ability to cope with natural disasters, or exogenous economic factors, has a lot to do with governance and, hence, adaptive capabilities. Economic disasters may have particularised roots in indigenous economic policies. But in a globalized economic environment, states, especially small states, are particularly vulnerable to global economic flows. The difference beween globalization in the 21st century and its equivalent at the turn of the 19th century is that the old conglomerations of states within particular imperial configurations which can retreat into themselves no longer exist. There’s no place to retreat to, and find sanctuary, as a small ‘state’. And the patterns of trade are very different now anyway.
On a political front, a further issue is that even 70 years ago, the conditions of ‘democracy’ were very different amongst European countries. Democracy, as we would recognise it in the 21st century, was very fragile in mainland European nations, such as Germany, at the end of the first World War, insofar as it might be said to have existed at all, especially so in terms of having any legislative power.
In our own case, the newly independent Saorstat Eireann imported most of its political institutions, culture, and democratic practice from the UK – in fact, its institutional structure was all well-established before final political independence was achieved. As such the independent Irish state was inherently ‘politically stable’ and democratic in its nature from its inception. Most of the decisions regarding its institutional makeup, and its social configurations, such as land-ownership and rules of private property, educational/health institutions and configurations of local government, had long since been resolved. It was a clean-sheet democratic state. Regardless of what was happening elsewhere in Europe as a reult of the 1930s economic crisis, Irish political institutions were inherently stable.
Arguably, the Irish state went ‘bust’ from the start due to a confusion between ‘identity’ and ‘purpose’ and the inevitable adjustment to ‘small state’ status within a world in which being a ‘small state’ was a signifier of powerlessness, especially after World War II. Without going into the detail, the newly decared ‘Republic of Ireland’ in 1949 reached the point of almost being entirely economically bust by the late 1950s, precipitating a rethink of ideology, identity and purpose. Had we got it wrong/ Yesh sure we had, except that our political elite was never much good at admitting to having made a complete horlicks of our independence – nor has much changed since then in that respect.
The point of all this musing is to suggest that in the 21st century we may need to think again about our place in the world. Perhaps, like these authors state, there will be a turn to the ‘right’ in consequence of the economic crisis? Or to the left?
In that instance on the face of it we have our own historical legacy to deal with there, especially as regards Sinn Fein and its legacy of violence and criminality. Or maybe other factors will intervene, such as increased geopolitical insecurity? Where do we stand on that? How do we adapt to the economic consequences of perceptions about secruity risk and its impact on trade and/or industries on which we rely, such as tourism? Is there a plan for that?
A very thought-provoking piece by the EU Vox authors. Good gudelines to think about what might happen next to ourselves, never mind the rest of us. it’s time to stop being so narcissistic perhaps (?)
Just a few quick points:
First, I would like to emphasise that my criticism of IFAC should not be interpreted as personal criticism of the Council members or of the sectretariat. I am absolutely convinced that the Chairman and I assume most, if not all, of the other Council members and the secretariat are doing their jobs to the best of their abilities in the context of the constraints under which they are compelled to operate.
Secondly, I can understand that the pace of moderation has dropped due to the proprietor moving on to greater things, but it really is hindering effective exchanges and useful dialogue. Is there not the potential to require a relatively low subscription to access the site? Or, better still, secure some sponsorship? Or a mix of both? (In passing I also note that very few people reveal their identities when expressing their views. I realise this is common on comment threads on most blog-sites, but it does evidence a real or perceived application of censorship and a real or perceived fear of punishment if the identity of those expressing views which might discombobulate the powerful, influential and wealthy were revealed.)
Thirdly, I believe there is a clear link between the totally ineffectual but extrenally enforced antics of the IFAC and the paper which prompted the initial post. In the south of Europe it appears that the principal opposition to the EU’s policies benefitting the wealthy and influential elites and the unncessary and excessive enforcement of fiscal retrenchment is coming from the centre-left and various manifestations of a new version of the left or reconstructions of the “old” left – or indeed various combinations of all three. Examples are Syriza in Greece which has more or less replaced PASOK, Podemos in Spain, the emergence in Portugal of a centrist left-wing govenrment supported by the various new and old strands of the hard left and the various threads of the left and centre pulled together in Italy in the Democratic Party (PD). In northern Europe, the assault is coming from populist, xenophobic, reight-wing parties, though, in many respects, the UK and Ireland are sui generis. (It is clear that the Labour Party in Britain, like Captain Oates, has decided to step outside for a while. Whether or not it ever returns is a moot point.)
So, the European Commission – and the dominant EU member-states – are perfectly happy to cut the Irish Government some slack on the fiscal front (irrespective of what IFAC might say) because they would very much like to see it returned to power. And they probably regret not cutting the Portuguese government of Passos Coelho some similar slack. The French Government is being provided with the fiscal flexibility it demands and President Hollande is “having a good war”. It will, however, be interesting to see how it plays out in Germany with its fetish about eliminitating the fiscal deficit – and in the countries in its economic orbit who are most prone to right-wing populist spasms. (In contrast the apparent deficit eliminating fetish of George Osborne is primarily an ideological urge to shrink and restructure the state’s role in the economy.)
If one accepts that (i) the Irish political class is incapable of volunteering the necessary changes in the budgetary process and (ii) the efforts at an EU level are ineffective, one is is left with the budgetary figures and the capacity to borrow as the two factors dictating the likely outcome.
The IFAC spokespersons have been remarkably successful IMHO in, for the first time, spelling out the limitations that these factors impose for the years beyond 2016 and in getting the message to register with the media and the electorate. I would hope that the politicians concerned will be forced to make a virtue of necessity and actually face up to the process of offsetting expenditure increases with reductions elsewhere under binding overall budgetary ceilings (which would, in effect, be the medium of political exchange between parties both in government and opposition as is the case where proper budgetary procedures apply).
There is nothing earthshaking in this. It is what the Swedes faced up to and what Osborne is attempting.
Fintan O’Toole excoriates the members of the Dáil in a recent polemic and, as is often the case, misses the point in the process. TD’s know that budgetary discussions are a waste of their time under the present legislation and budgetary procedures which are, as I pointed out some time ago, as binding as a bit of torn elastic.
Your musings are always interesting.
‘ our political elite was never much good at admitting to having made a complete horlicks of our independence – nor has much changed since then in that respect.’
History will probably be a bit kinder than that. You mention ‘identity’ and ‘purpose’. It is the nature of politics that elites compete for power and that political hegemony is exercised via ideologies. As Gramsci wrote in his prison cell, having weapons is never enough to create hegemony or legitimacy.
I was taught in primary school that pre-independence Irish history oscillated between constitutional methods and physical force. That is probably universal, but it has taken place differently in different parts of the world, and leading parts of course influence less developed areas. As Marx called it ‘uneven and combined historical development’.
The UK constitutional order was built over centuries on the rule of law, the right of the individual, the protection of property, freedom of the press etc. We inherited much that is valuable, but by no means perfect. Insofar as the Irish Free State maintained stability, however, the benefits went primarily to those who were in a position to benefit, and most particularly to those who already had a claim to property, or an economic ‘rent’, monopoly or sinecure of any kind.
Not all Men and Women of No Property had similar backgrounds, but what they had in common is that they did not benefit much from independence. Connolly’s legacy was muted and blunted in the early days of the state, when chronic unemployment weakened trade unions and squalid overcrowded housing drove many poor town dwellers to Britain.
The Civil War was complex in its origins, but one of the factors was rural poverty. Many countries in Europe had peasant parties in the 30s, and Fianna Fail can be seen as part of that pattern. De Valera was able to harness the 30 acre farmers as well as the huge American diaspora. Votes and money.
Civil War politics wasn’t all about the civil war. It reflected the on-going severe divisions in our society. Both sides sought to ally themselves with the Church, and the Church played both sides off against each other. Fianna Fail’s blend of nationalism and piety turned out to be the winning brand in Dail Eireann. Part of the winning (in political but not economic terms of course) message was the Four Green Fields.
What was forgotten in the South (as they say up north) was that Belfast is only 90 miles from Dublin. The sort of politics which was successful in the Republic had the inevitable effect of deepening and entrenching fear and discrimination against another set of folk who had no property on the island. While northern catholics (by no means all nationalists) had little influence in Dublin, they were deeply affected by Dublin politics, and their interests were never seriously considered, in my view as a non-historian.
Small wonder then that they should have tried to develop their own ‘civil rights’ politics within the British Welfare state. And even less surprising is the fact that the physical force tradition, with all its horrific consequences, including atrocities, torture and post-conflict criminal activity, should re-emerge with a vengeance. Civil avenues of resistance were foreclosed arbitrarily and violently, and state forces tended to depart from the rule of law. All of the necessary ideologies, including but not limited to those which drove Irish independence were to hand.
Things continue to evolve. The social democratic ideology espoused by Sinn Fein today is a long way from the IRA’s ‘anti-imperialist’ strategies of the 1970s, but every party has uncomfortable legacies. As Shimon Peres put it ‘we don’t make peace with our friends, we make peace with our enemies’, and people who are systematically excluded cannot be expected to be friendly.
If future governments on this island, including the one at Stormont, are going to be coalitions, then respectful critical engagement, within and between parties is what will IMHO best serve our people.
The following from the IFAC report:
‘What is striking is the degree to which the tax overshoot is dominated by corporation tax – accounting for around 74 per cent of the overperformance in the year to date. Indeed if the corporation tax overperformance by end-October is maintained, corporation tax will likely exceed the revised Budget 2016 expectation with implications for next year’s forecast. Without this surge in corporate taxes, the tax overrun would be much more modest and would not have covered the extra spending announced for 2015’
Corporation tax in Ireland is a black box. Returns are what the auditing and accounting firms say they are. A teeny bit of me is wondering why this extremely well-heeled economic sector might want to do something nice in an election year.
Corporation tax in Ireland is a black box, but its mostly FDI stuff. Returns are what our big auditing and accounting firms say they are I guess. A teeny bit of me is wondering why this economic sector might want to do something nice for Christmas, this year…..
Apologies for that mis-posting
Here is what I intended to post
Thank you, DOCM, for your response and thanks to Kevin O’Rourke for his rapid moderation. We all seem to be shooting off in variety of directions – and covering a variety of important issues. But on the Irish front it probably meakes sense to spare breath until the people what kind of government, if any, they want probably sometime next February. The odds are on a numerically much reduced version of the current coalition with possibly some support from various centre and centre-right groupings and individuals. This suggests they’ll struggle to deliver the dishevelled level of governance they’ve delivered since the Troika departed – and there is no possibility that any of the fundamental structural or procedural dysfunction of democratic governance will be addressed.
I do not think the various contributors are shooting off in a variety of directions, rather coming at the problem posed from different directions e.g. the contribution by Veronica in particular.
I favour looking at the issues in terms of the – often hidden – sudden shifts in perception that occur e.g. the examination by the SBP in today’s edition of the state of the Irish trade union movement; dire. In summary; the public sector is organised, the rest of the workforce isn’t. Labour forgot this and it seems certain to be their undoing.
Whatever about their partner, Fine Gael do not intend to be caught a second time in the pre-electoral game, hence the proposed abolition of the USC, the one taxation measure which underlined the general principle that every able- bodied adult not in full-time education had to make a contribution to the common pot if they wished to benefit from it at some stage.
But a game is all that it is. One which the electorate is more than willing to play. The question is whether the budgetary arithmetic will force the necessary changes in governance.
Would it not be logical for FF & SF to merge. The Provos were founded by FF. Their policies are converging rapidly. FF under Martin opposed the Recovery plan, largely designed by the patriotic Brian Lenihan, SF tried to destroy the Irish economy since their inception, an objective nearly achieved twice In my working life.
I wish I could be as sanguine as you are. Because what are described as “market outcomes” – even though they result from the rigging, subversion, suppression and distortion of markets by the powerful special interest groups – generate so much income inequality governments are compelled to intervene as a re-distributor of income to an extent far greater than in any other OECD state. As you say, it is a game and voters have become used to playing it.
However, what has changed over the last 20 years or so is that many of those who either are losing out or who perceive they are losing out relative to other more influential and privileged groups in this great income redistribution game are deserting the traditional mainstream parties and voting for a plethora of factions and individuals that range across the political spectrum.
Ironically, but not unsurprisingly, this dissipation of their political voice greatly diminishes their ability to influence the great income redistribution game. In most established parliamentary systems with two reasobaly well-defined combeting political blocs it is relatively rare for a mainstream opposition to force a government to perform a major policy change or u-turn. The effective trimming, adjustment or even reversal of any controversial polices is generally the result of often fiery deliberations in closed meetings of the parliamentary party (or parties) in government. This is particularly the case in Ireland, where the dominance of the executive over the legisalture is almost total – to the extent that normal parliamentary procedure is simply a usually, but not always, dignified process for rubber-stamping government decisions and proposed legislation (with some added theatrical effects).
Many voters are deserting the mainstream parties because they are aggrieved the great income distribution game isn’t favouring them (and, obviously, for other reasons). But by doing so there are fewer mainstream party TDs and, if the indications of current voting intentions prevail, there will be considerably fewer mainstream party TDs to form the core support of the government in the next Dáil. And that means far fewer governing party (or parties) TDs to communicate their discontents to ministers both inside and outside parliamentary party meetings and to compel ministers to change tack.
All this means is that the great income redsitribution game will be played in a different way, but it won’t result in any major changes to address the fundamental dysfunction in democratic governance. In fact, it will weaken even further any efforts that might be made. Although the various left-wing and psuedo left-wing factions are unlikely to participate in governance, it remains their objective and, as a result, they are very much keen to retain the current dominance of the executive over the legislature – and, if they had the opportunity, would exploit it to the limit.
It all comes back to the extent to which the mainstream parties have been captured by powerful and influential special interests groups – to the extent that it doesn’t matter to these groups which combination of the mainstream parties is in power – and to the requirement for these parties prior to elections to engage in the great income redistribution competition to appease and bamboozle (as they see it) the masses.
If the triple blowouts in 2008 didn’t provoke a profound overhaul of the dysfunctional system of governance, it is difficult to see what will.
The post autarky, Lemass FF was all that you say it was. But then it morphed into the CJH version of FF and all but destroyed the economy of the country on two occasions, as well as setting up the provos of course. Now it is led by a man who is about as far from Lemass FF as you could find-anti work ethic, in favour of higher taxes, more welfare spending, against reform and running on a platform opposite to that of the late and great BL.
In contrast the current govt has implemented the BL agenda with a few significant tweaks here and there.
In the economies that are doing well in Europe, a basic consensus exists between the centre-left and the centre-right, anchored in highly productive, but varied areas of export-led economic activity (e.g. cars in Germany, horticulture in the Netherlands) which allows for swing-door governments, or grand coalitions (Germany is on its second successive one), but a continued broad consensus on the general direction of the country. In those countries that are doing badly, the debate is still couched in out-of-date left-right political discourse where the phenomena you describe prevail. These are the ones most at risk of conceding to one extreme or the other. (We have been here before; as ably described by Karl Popper in various works).
The burning question for Ireland is to which category does it belong or aspire?
I am pretty certain that it is the first and that, whatever the outcome of the election, a government of the centre of some kind will emerge for the very same reasons; an idiosyncratic but functioning – almost booming – economy which would do even better if the politicians would stop tinkering with it.
For your edification!
When we get to the point that such a proposal could come before the Dáil as an exercise in the European solidarity, from which we have already benefited, but with certainty in respect of an EU country other than Sweden, we will have actually graduated from delusion to reality.
Very unlikely that FF and SF will merge. They loathe each other in most of rural Ireland. One objection that most FF supporters would have to merging with SF is that – how can I put this delicately? – lets just say that in N. Ireland among those who’ve been SF members since the early years of the Troubles and are now well ensconced in its upper echelons (and its this cohort that runs SF on an All-Ireland basis) there is a considerable overlap with membership of MI5.
@ DOCM: Out of date Left/Right stuff? Well, if’n you mean that the economically powerful now make no pretense about their ‘purchase’ of government, for how else would Irish big business and those special interest groups exist: then I’m with you.
We might get a re-run of the early 1980’s general elections (June ’81: Feb ’82 + Nov ’82: Feb ’87 and June ’89). The matter was finally settled in 1989 when FF decided it had no option but to seek a coalition partner with the PDs. Its all coalitions now.
I believe it may be a tad harsh to ‘blame’ the voters – afterall just look at what is offered to them! No matter what government ensues its an elected dictatorship – and behaves as such. The erstwhile opposition have zero interest in parlimentary restructuring – it might be their turn next time. Better not spoil the party – an’ all dat.
Assets which are viewed as an investment typically respond to market forces. Farmers may get 70% of income from hand-outs but it can be pretty lucrative income if you have enough land. The ratio between the site price and the build costs in house prices does not rebut my argument that land prices are determined by what people will pay for houses. It may speak to the fact that capital prices itself above labour, and that free markets put a premium on scarcity, but it does not support the contention that land prices are preventing construction.
FF founded the official IRA, not the Provisional IRA. I think FF and SF should merge anyway It would be a bit like Aer Lingus air hostesses joining their Ryanair equivalents. But Republicanism would have a one stop shop. And more critical mass.
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