The vested-interest, Union-driven and flaccid left exhausted all its ideas before the catastrophe hit.
The EU/IMF ‘bailout’ was supposed to be the moment of truth for Ireland’s political élites – the moment when the opposition were to come out from the shadows of the discredited and politically weak Government.
In the end, the shadows became too comfortable a place for our ‘alternative leaders’ to leave. And thus, the ‘bailout’ became a moment of truth. The uncomfortable truth registered that the Irish Left’s opposition to the current régime was nothing more than grand posturing, devoid of any credible ideas and gutless to challenge the establishment.
The failure of the Left to present a serious alternative to the Government’s disastrous policy responses to the current crises is, of course, nothing new. Instead, it is a function of the forces that have shaped the Irish Left for years.
The first one is the complicity of the Left in the creation of the very crises we face. During the boom, the Irish Left came to rely on Social Partnership to deliver for its support-groups the spoils of the ‘class war’ with the rich Celtic Tiger blue-bloods.
Social Partnership, cleverly exploited by Fianna Fáil, but driven predominantly by the Left-aligned social-welfare pressure groups and trade unions, acted as a transfer mechanism that channelled vast amounts of private income into the coffers of its members. These very transfers came at the expense of the middle-classes and genuine entrepreneurs. The system actively solicited the means for extracting taxpayers’ funds to pay for endless spatial strategies and development plans and benchmarking awards. The former was political pork that became the support engine for the property boom, semi-state companies and in its later incarnations – to the Social Pillar interest groups. The latter yielded handsome dividends to union members allowing the Unions to retain their base within the privatised enterprises.
The welfare, environmental, cultural, and anti-poverty (domestic and foreign) campaigners that sprang up in droves across the landscapes of our ‘social economy’ were the direct beneficiaries of this scheme to collect rents out of the working economy. Every new large-scale state investment project or benchmarking exercise was greeted by a chorus of voices demanding that the poor or the vulnerable or the creative or the Irish-speaking or the non-for-profit or the environmentally-concerned receive their share of the Celtic-Tiger spoils.
Throughout the boom, the only criticism of Government policies that the Left registered was the incessant drone of voices demanding more transfers.
“Tax more, charge more, build/provide more social housing, …more, more, more…” was the favourite refrain of the Left lost in the process of grafting its ‘Marxism for Dummies’ ideology to the bandwagon of Social Partnership. Only the extreme Left remained true to some of the core principles it held. And it was ostracised by both the state and the complacent Centre-Left parties.
The lost souls and minds of the Irish Left did not pause for a nanosecond when their leaders took seats and pay at the boards of the state bodies, the Central Bank, Fás, Government-created quangoes and working groups. They might indeed have flinched for a nanosecond at Bertie’s declaration that he was the last standing socialist in Europe, but they partied on through the Inchydoney accord and went on tacitly endorsing the property boom. Demands for planning restrictions and social-housing allowances, affordable housing and ‘expanded lending to the less well-off’ all helped to inflate the bubble.
The Irish Left’s response to the fiscal and banking crises that ensued has been a textbook example of mental collapse by an ex-hostage suffering from acute Stockholm syndrome. They decried the release from their captivity that was the collapse of Social Partnership instead. Faced with rapidly accelerating public debt and fiscal deficits, with a historically-unprecedented crisis in the banking sector and the deepest recession known to the civilised world since 1939, the Irish Left went on to produce not a single original alternative to the Government’s disastrous policies. In fact, the majority of the Left had simply slid into the Borg Collective response to the crises, raving “The State must protect our interests!” at every twist in the policy debate.
Thus, the Left’s strategy on dealing with banks was the idea that Irish banks should be nationalised. Not for the purpose of rebuilding their balance-sheets and business models, but to ensure that they continued to underwrite absurdly-over-extended mortgages and start lending anew to the Leftist causes – the environmental and social ‘economies’. The Government, to their surprise, even obliged.
The Irish Left has failed to see through the fog of its ideology that the state simply cannot go on running double-digit deficits year after year. Instead, cuts to current expenditure were opposed, while stimulus to capital investment was promoted. Very few thinkers in the Left camp were able to grasp the simple arithmetic of deficit and debt formation, or to recognise that their preferred policies would only exacerbate the tortured death-spiral of the Irish economy.
Even faced with a 32% deficit-to-GDP ratio this year, all the Left could produce in advance of the Budget 2011 was the battle cry: “Though shall not cut too much!” In place of deficit cuts, the Left has offered a clichéd ‘solution’ of taxing the rich and, once again, ‘stimulating’ the economy. But the sums never added up. Spurred on by the likes of the Irish Times and the Labour Party, the Left really does believe that Ireland’s private wealth is liquid, immense and unencumbered by leverage. They fixated on the Central Bank’s assets side of the national balance-sheet and ignored the liabilities. Out of this came the suggestions to tax deposits, including those of the multinational corporations held in IFSC accounts. This was followed by the equally brilliant suggestion of taxing wealth. All came at the time when depositors in Irish banks were already on the edge.
A psychosis of inconsistent and innumerate policies continued all through the Government decision to review the state’s ownership of the semi-state enterprises. The Irish Left was unable to see that under the Social Partnership system, semi-state companies dominated both the employers’ and the unions’ sides of the talks. As a result, the entire Social Partnership has degenerated into a system for erecting ever-more-elaborate barriers to competition in the sectors controlled by these entities. The low corporate taxes, high minimum wage and welfare payouts ‘achieved’ by Social Partnership were nothing more than compensation to interest groups in exchange for their agreement to retain an anti-markets system of clientelist state- and semi-state institutions. This inexorably led to the complete merger of the banking and state sectors in Ireland. But the Left failed to see this coming, nor is it able to see its own role in facilitating merger.
Both the Government and the Left have failed to grasp the need for real change in the ways our public and domestic private-sectors operate. To their credit, some thinkers from Socialist Ireland have managed to produce references to the need for productivity-enhancing reforms and even reductions in the state-bloated bureaucracy. But none have gone far enough to either provide any real alternatives to the Croke Park agreement or to admit that the Trades-Unions-led process of reforms is a non-starter.
In fact, there was absolutely no serious criticism of the Trades Unions’ leadership’s complicity in the Ponzi Game that was our Celtic Tiger boom. For example, ably mapping Ireland’s Golden Circle in the private sector, the Left’s think tank, Tasc, conveniently omitted the Union and Public Sector grandees cross-pollenating the boards of state companies, quangos, thinktanks, and regulatory authorities.
The fundamental cause of the Left’s inability to provide a viable alternative to the current Government’s disastrous management of the crisis is that any viable solution to the banking and fiscal crises requires deep reforms. These reforms will have to address the problem of the massive public and private debt accumulated by Ireland Inc, but also the growth deficit in the domestic sectors. These two objectives require injecting new structural dynamism into the economy where protectionism of the incumbent state-regulated producers has been the hallmark of the Irish Left’s policies in the past. Put simply: to be viable, an alternative Left vision of Ireland requires breaking up the cosy cartel of unions and entrenched business élites – the very Social Partnership that sustained our official Left.
And extracting yourself from the feeding trough of tax-financed social policies, my friends, is the hardest thing to do.
Dr Constantin Gurdgiev is lecturer in finance with Trinity College, Dublin.