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The Irish Right and an Economy at War February 27, 2009

Posted by Garibaldy in Economy, Irish Politics.
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There has already been some mention here of the remarkable ten minute televisual feast that was Junior Finance Minister Martin Mansergh and Margaret Ward of the Irish Times debating the southern economy on Hearts and Minds last night. Available to us all thanks to Pete Baker at Sluggerotoole. Without him some of us may have been denied the opportunity to see Mansergh demonstrating that he is not cut out for the cut and thrust of frontline politics by nearly losing it. Noel Thompson’s introduction pulled no punches, describing the Celtic Tiger as “toothless tabby” and the south set to be the worst performing developed economy in the EU, as well as raising the issue of a European bailout. Margaret Ward has offered her account of the debate, and I want to pick up on some of what she said, and how it relates to the emerging discourse of crisis we discussed here.

So what was Ward saying? She accused the government of fiddling while Rome burned, arguing that its inaction was itself a form of action. Here is her own paraphrase of what she said

Paraphrasing it I basically said this was an emergency and that we were at war for our economic survial. It was
time for unity. The time for party politics is over. We all need to come together, start talking to the social partners and make cuts
across the board. Why isn’t the Financial Regulator organisation in the dustbin? All senior bank management still not gone?
People are frightened – they’re losing their jobs, emigrating, huge numbers of small businesses are failing with banks refusing to
make loans…They need some hope.” I asked him loads of questions and asked him what they were doing about it. Why weren’t
they asking for help from the extraordinarily intelligent experts we have in this country? Why weren’t they communicating a plan to
the people?

As with Eoghan Harris, John Gormley and others, Margaret Ward is convinced that there is something rotten in the state of the Irish economy, and that we are now fighting for our very life. Engaged in a war no less. I’ll come back to the implications of this argument at the end. However, unlike them she believes that the corruption scandals have hurt the Irish economy in the eyes of the world.

If you are not extremely angry about what is going on then you should be. Ireland will be bankrupt in about 12 months. We are burning through about €1 billion or so a week. Internationally, Ireland Inc. is viewed as corrupt country where cronyism is rife and that’s accurate. Are you happy with that reputation? I’m not. It’s embarrassing. We ALL have to inform ourselves about the FACTS and then take action – quickly.

She was more explicit on Sluggerotoole

No one wants to lend to us because we are seen as corrupt fraudsters. As a result, we pay more to borrow money than other countries.

The other half of her argument was that the government was not ensuring that enough money was getting to private enterprise from the banks, and that a new bank should be created by the state to loan to small business. No arguments from me about the need for a new bank, about the need to ensure that businesses do not go to the wall where possible, but of course we also need to expand this to individuals, and especially to their mortgages.

It’s fair to say that Mansergh was not best pleased with her attitude and arguments. It’s also fair to say that I find myself in the unpleasant and unexpected position of being on his side of the argument. Mansergh made the point that the government was not going to clobber the people all at once. Ward’s response was an outraged and repeated “Why not?” The implications of her question are remarkable. While trying to appear as the voice of the man on the street, alone, abandoned and ignored by government, the actual consequences of her policies being adopted are simple. She said the government needed to talk to the people, to communicate with it. That is all well and good. But what does it seem she thinks the government should actually be saying? We are cutting your wages, your benefits, your public services, your schools, your hospitals, and our commitments to you and to social welfare. Instead we are going to concentrate on ensuring that we give money to business so that if you are lucky some of this will trickle down to you (because there was no mention of helping individuals out, just businesses). This is her version of offering the people hope. Spare us.

As I’ve noted already, this argument is being made by a range of government and media figures in the language of war. Ward in fact argued that there was a danger of being “economically colonised” by Europe. Yet it never seems to dawn on any of them to ask what governments do during times of war. Do they cut public spending? Do they reduce their activity? Do they downsize their role in the economy and in the lives of the citizens? Of course not. In order to win a war, the government takes into its own hands the direction of the entire economy. It creates new factories and new jobs. It suspends political ideology in favour of the efficiency offered by the collective energies of the people harnessed by the state. Perhaps when they meditate a little more on that, Ward and co might rethink their use of the terminology, or even the supposed solutions they are offering to the crisis.

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Comments»

1. ejh - February 27, 2009

Why weren’t they asking for help from the extraordinarily intelligent experts we have in this country?

Did she make any suggestion as to where these people might be found?

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2. EWI - February 27, 2009

No one wants to lend to us because we are seen as corrupt fraudsters. As a result, we pay more to borrow money than other countries.

I was under the distinct impression that what has done more than anything else to raise the cost of our borrowing was the e440bn bank guarantee. If this is as I understand it, then it ought to be shoved back in the face of FF ministers (and FG wannabe-ministers) who insist that the public service is the problem.

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3. Garibaldy - February 27, 2009

Far too sensible an explanation EWI.

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4. WorldbyStorm - February 27, 2009

I saw that interview (and kudos to Pete) on foot of the mention elsewhere. Got to say I agree with your analysis. I thought Mansergh, over the top as he was, and really – this is the guy who brought people to tables (must have been more afraid of him, or appalled, than of each other) – was markedly less offensive than she was. Her schtick seemed to consist of saying repeatedly that people want to be told…well, what exactly? She didn’t specify. I fear she believes the guff that told in a patient and patronising voice about ‘hard measures’ we’ll all just nod and accept it. As for the comment you pick out about ‘Why not?’, it made no sense in her argument. Another pain for pains sake merchant.

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5. tosser - February 27, 2009

Nationalising Anglo bumped up our cost of borrowing more than anything. Irish 10yr bonds were trading at 162bps over bunds on the 16th January; a week later it was 294bps. Don’t have the figures to hand, but IIRC announcing the guarantee only caused a jump of somewhere around 20-40bps.

If anyone’s interested, the spread’s about 275bps now.

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6. WorldbyStorm - February 27, 2009
7. sonofstan - February 27, 2009

Worth checking out Michael Tafts analysis today on that tosser…
Was wondering who ‘that tosser’ was, and wondering a little at your uncharacteristically unparliamentary language : )

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8. WorldbyStorm - February 27, 2009

Oops… I’ll clarify it… :)

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9. Garibaldy - February 27, 2009

I think WBS the Why Not comment revealed her real agenda. The free market ideology that got us into this hole in the first place. Not that the free market applies when big business needs government help of course.

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10. WorldbyStorm - February 27, 2009

Absolutely, I guess I’m trying to say that logically it had no place in her much more emollient ‘something must be done’ and ‘the government is doing nothing’ rhetoric. But you’re right, it was the baring of the teeth…

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11. Garibaldy - February 27, 2009

Yeah it was a bit out of kilter with the rest of it all right, but all the more revealing for that. The sheer arrogance of the attitude is disturbing especially given the situation we are in.

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12. CL - February 28, 2009

Seems like shouting matches are breaking out all over. Something is beginning to crack. And the ‘experts’ disagree:
‘It’s not about the property developers and the banks anymore – it is about the survival of Ireland,” said Morgan Kelly

‘This talk of disaster is so one-sided and irresponsible, It is bad for Ireland.” said Gerard O’Neill

http://www.iht.com/articles/2009/02/27/business/wbirish.php

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13. D. J. P. O'Kane - February 28, 2009

There is no honour among thieves, that’s for sure.

As for ‘national government’ – a government composed of two parties that have hated each other with venom since 1923 is supposed to deliver stability and swift, competent governance how, exactly?

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14. Bartholomew - February 28, 2009

There’s a very peculiar detail in that International Herald Tribune article. It describes Morgan Kelly as ‘a specialist in medieval demographics’, but according to Kelly’s page on the UCD website, his research is into macroeconomics and economic systems. Maybe just a typo, but very strange all the same. Was the journalist thinking about the Black Death?

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15. Montevideo - February 28, 2009

“The intelligent experts”- a rare breed indeed, ejh. The “the survival of Ireland”- the nation will survive, the system that has wrought the economic chaos perhaps not. Is this why some commentators of the Right are becoming more shrill? The tom tom beat of abandoning the social partnership model seems to be getting more muted, maybe due to the demo last weekend. FF are now fighting for their political lives, so it’s my guess that they’ll seek to engage, otherwise working class votes that were going their way will start to flow to Labour. FG won’t be much of a friend to workers judging by Varadkar’s recent interviews, and comments on the employment compliance bill.

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16. EWI - March 1, 2009

Nationalising Anglo bumped up our cost of borrowing more than anything.

I see that my information is out of date (the second time that that’s happened in a week. Oh, well). Thank you for that, er, tosser.

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17. Joe - March 2, 2009

“The tom tom beat of abandoning the social partnership model seems to be getting more muted, maybe due to the demo last weekend.”

Yesterday, Cowen was on the telly saying he still wants social partnership. This morning I heard on the radio that the Dept of Finance is saying that people on the lowest incomes, who currently pay no tax, will have to be brought into the tax net. If the union leaderships go back into a social partnership that allows this to happen, they should be strung up. And if the union memberships vote for such a deal, I will buy a video of that Baader Meinhoff film to see what I should do next.

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