The Irish Department of Finance 1959-99: A lively account of Ireland’s rise from bust to boom

The Irish of the Department of Finance 1959-99

Author: Ciarán Casey

ISBN-13: 978-1-910393-43-7

Publisher: IPA

Guideline Price: €35

In 1959, the century-long relative decline of the Irish economy was accelerating. As continental Europe enjoyed “les trente glorieuses” – three decades of postwar boom – Ireland was failing. And emptying. Mass emigration was so bad that many wondered if the achievement of statehood a mere four decades earlier had been a mistake.

Fast forward another 40 years, to 1999. As the millennium ended, Ireland was experiencing the most rapid period of economic growth that any already developed country had ever experienced. Full employment had just been achieved for the first time on record, and in July of that year, the jobless rate fell below Britain’s, another historical first.

These two, very different years, are the start and end points of a new official history of the Department of Finance by economic historian Ciaran Casey.

Understanding the dynamics of a national treasury, and the relationship of its leaders – ministers and mandarins – with other political and economic actors is indispensable if one seeks to understand how a state works. The book’s scene-setting opening chapter does exactly that. A portrait of the machinery at the heart of the Irish State, it captures many national and international trends in how countries are governed.

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If an ever-expanding State has meant government departments are less siloed than they used to be, an ever-closer European Union has meant that civil servants have become more internationalised

A much bigger and more powerful taoiseach’s office is common in prime ministerial systems across Europe, something that has weakened once-dominant finance ministries. That same power shift happened in Ireland in the late 20th century (and beyond), reflecting a bigger role for the State in more areas of economic and social life, and the need for more interdepartmental co-ordination from the centre.

If an ever-expanding State has meant government departments are less siloed than they used to be, an ever-closer European Union has meant that civil servants have become more internationalised – they spend a considerable amount of time in Brussels with their counterparts from other member countries and the bloc’s institutions, and none more so than finance ministry officials.

The opening chapter captures all these trends superbly. It alone is worth the cover price.

The following four chapters broadly cover a decade each. That means most of the book makes for grim reading. The almost unending bad economic news, the lurching from one crisis to the next, the inertia and the sense of hopelessness, pour from every page until the final chapter.

Quick fix

In the late 1960s, for instance, when a multi-year growth plan was being drawn up, a target of a mere 4,000 net new jobs a year was settled on. By today’s standards, when that number of jobs is routinely generated in any given month, this looks like a paucity of ambition. From the perspective of those framing the plan in the department on Dublin’s Merrion Street, it was anything but. At that juncture, there had effectively been no net job creation since the State’s founding.

While most European countries had got inflation back under control in the early 1980s, in Ireland it was still running above 20 per cent as late as 1982

Most interesting, or at least most topical in today’s context, is how the Great Inflation of the 1970s and 1980s was handled. This makes for particularly head-hanging reading. Ireland came through the first oil shock in the mid-1970s comparatively well. But voters wanted a quick fix to the cost-of-living crisis. They elected Fianna Fáil in 1977 with its infamous manifesto that promised to borrow big and stimulate an already over-heated economy.

The result was an inflationary firestorm and soaring budget deficits. The unwillingness of ministers and civil servants in other departments to control government spending is amply recounted, with Department of Finance officials scathing not just of other ministers, but also of their colleagues across the bureaucratic system.

While Casey is no parochial, the book is weakened by insufficient comparison with peers. While most European countries had got inflation back under control in the early 1980s, for instance, in Ireland it was still running above 20 per cent as late as 1982. A sense of hope finally emerges with the economic turnaround in the late 1980s, but Ireland’s unemployment rate was still the third highest in the OECD in the mid-1990s and it was not until 1997 that the jobless rate finally fell into single digits (after decades of languishing stubbornly above 10 per cent).

The book is short, at 200-odd pages. For general readers, that is good – historical tomes on government departments tend not to be read by many. It is also free of the jargon of mandarins, accountants and economists. All of this makes it a quick, easy and informative read on the final four decades of the last century as seen from what is still the single most powerful government department. There is, however, much more in the archives still unexplored. If Casey only scratches the surface, he provides a strong foundation for other scholars to work on.

Dan O’Brien is chief economist at the Institute of International and European Affairs, a weekly columnist with the Business Post newspaper and a former economics editor of The Irish Times