The New Third World?

by Kevin Whelan

Michael Lewis, celebrity columnist with Vanity Fair, has announced that in his book Travels in the New Third World, Ireland will be one of the main exhibits. A recent visitor exposed to the apocalyptic reporting of the Irish economic crisis in the USA, told me that he was surprised not to find tumbleweed on Grafton Street.  In an incredibly short span, world opinion has banished us from the rich man’s table and consigned us to the Third World. Should we respond to this schadenfreude with agreement? rage? squirming? silence? What is happening to us when the Tiger turned out to be a Cheshire cat which disappeared with an enigmatically cynical grin? We all know the story too well now: a torrid property affair that ended in bitter tears and recriminations, banks as serial abusers that ended up in the protective custody of the state, the advent of the past exonerative - ‘Mistakes were made’ as a new tense in Irish politics, ghost estates haunted not by a blighted past but by a lost future, a manic-depressive national mood - as if we had been too high in the boom years, and have now collapsed into a horrifying depression.

The historian’s response can only be the long-standing one: The owl of Minerva flies at dusk, and we can only assess what has happened when it is over. In retrospect, as we pore over the entrails, it is clearer that there were in fact two Celtic Tigers: the first real one ended in 2003. The second was a bubble, blown up by cheap money and even cheaper politics. Senior Fianna Fáil politicians, Charlie McCreevy and Bertie Ahern, were the main abusers. They encouraged private interests to trample over the public good. On their watch, greed, collusion and corruption made a mockery of planning, as robber bandits sang ‘feck your planning system, I’ve my Merc outside’. Fianna Fáil disable the national alarm systems, leaving the country open to the predations of crony capitalism. The profits of doom were stored up, as get-rich-quick schemes for the insiders became get-poor-quick schemes for the country. A compliant media were ear-splitting advocates for the property sector - a media who have utterly failed to acknowledge their complicity in creating the fiasco - at least we can hold our politicians to account.

While an angry and repetitive ‘debate’ furiously assigns blame, it is clear that in a democracy, a country gets the politicians and the policies that it votes for. A state operates the political system that its citizens permit it to operate: wider objectives cannot be attained unless the citizens support them. Our Civil Service tradition, founded on its highly centralised, authoritarian and rigid British predecessor, oozes hostility to necessary change. But politicians and Civil Servants can only function with the will of the people: Blame the politicians, yes: Blame the Civil Servants, yes: but don’t stop there; blame the citizens too.

When we are done with the blame game, consider what actually happened here in the areas that we controlled. The PDs – with their inside man McCreevy, restructured the tax system in an American direction - low taxation, low public spending, ‘light’ [for which read no] regulation. The inevitable consequence, long ago pointed out by J. K. Galbraith, is private affluence and public squalor. The line of argument here is that poverty is entirely a personal issue: structural reasons do not ‘explain’ poverty – it’s just that you are a loser, a drunkard, personally irresponsible, lazy, a cheat   ... Implicit - and often explicit - in this analysis is that the can-do wealth-creating classes have no fiscal, political or ethical responsibility (especially redistributive taxation) to help the disadvantaged. By 2005, the Republic’s ratio of taxes to GDP, at 32%, was 9% below the euro zone average of 41%.

And yet with an internationally low level of personal taxation, Irish citizens demand a Scandinavian level of public service provision, including education to health care. Total tax-to-GDP ratios are highest in the Nordic countries, topping 50% in both Sweden and Denmark.

In Ireland, low taxes and low public expenditure on education, health and welfare result in inequality, relative poverty and weakening national cohesion. A large proportion – one–third - of our society was left behind in the boom years, creating a two-tier society – and few politicians, or Irish people in general seemed to care all that much. Those we might expect to act as their voice had issues of their own: the Catholic church mired in a swamp of its own making, the trade union leaders eager to get their snouts in the trough of social partnership. Those stuck in the poverty trap include older people (especially older women), early school leavers, the long-term unemployed, the chronically ill, the disabled, the single mother, ex-prisoners. These are the groups with least media access, political participation, or involvement in civil society. In the Tiger years, they drifted deeper into relative poverty, into lives lacking in dignity, and are more detached than ever from mainstream society.

The most striking feature of the Tiger is that it was marked by social rigidity. Social mobility has been remarkable muffled, given the astonishing scale of economic transformation. While the number of people in the higher social classes increased, this happened by expansion of the numbers, not by any redistribution or movement between classes. The fattening national cake allowed a huge number to eat their fill, rather than scrap over the distribution of the slices. The education system was critical here. In Dublin especially, the school system functions as a social conveyor belt, reliably delivering Tiger cubs into the middle classes.

It is now clear that the Tiger model was an unsustainable hybrid of American neo-liberalism (minimal state, privatisation of public services, public-private partnerships, relaxed regulatory regimes, low corporate and individual taxation, clientelism) and European social welfarism (developmental state, social partnership, welfare safety net, high indirect tax, EU directives and obligations). It is equally clear that the Irish political system bet the bank (literally) on this model - the greatest fiction that we produced in this country in the last two decades, way beyond the imaginative capacity of our writers. How did this happen?

Irish politics moved decisively to the right in the Tiger years. The advent of the Progressive Democrats at the extreme right encouraged an all-too-willing Fianna Fáil to follow them slavishly in that direction. Labour then moved from left of centre to try to capture the vacated Fianna Fáil space. The net result was a gravitational flow to the right across the entire Irish political spectrum. Fianna Fáil, after eight decades of behaving like a natural party of Government, lost its way, as its political values hollowed out, and fell among thieves in pin-stripe suits. It projected itself and behaved as a party of power and access to power, and nothing else, and it jettisoned even the vestige of vision. In pursuit of power but with no idea of how to use it responsibly, it abandoned politics as a realm of ideas and can have no complaints when voters now abandon them. They became policy-takers not policy-makers – policies imported from Britain and America when they were well past their sell-by date.

The strengthening of the Right undermined national cohesion, and Ireland now has one of the sharpest internal social divides anywhere in Europe. The Tiger years deepened and entrenched the social divide. The privatisation and individualisation of its market model tore gaping holes in the social fabric, increasing the pressure on the state to plug all the gaps.

And yet when all is this is said, done and acknowledged, are we really in the Third World? Economically, a wider and longer-term perspective might suggest that our problems were not entirely home-grown. We became the most globalised economy in the world: when the global economy boomed, so did we. When it tanked, so did we. When it improves, so will we. We are a rich country judged by any international standards. It is an insult to countries immersed in genuine poverty to suggest that our problems equate with theirs. Our third-level educational participation rates are impressive by global standards; 63% of females and 48% of males aged twenty are in full-time education. There are more mobile phones than people in Ireland. 73% of our households had a computer, 54% have a broadband connection. In 2010, we have higher penetration of broadband services than the USA, Britain and Germany.

Back in 1902, faced with an earlier crisis of the Irish state, W. B. Yeats suggested that great cultural and political leaps forward emanated not so much from progressive ideas as from despair: ‘The first flying fish leaped, not because it sought ‘adaptation’ to the air, but out of horror of the sea’. Tumbleweed on Grafton Street, no, Abercrombie & Fitch, uggs and Louis Vuitton, yes. Flying fish anybody?