'Old politics' had effect on Irish boom and bust, says professor

IRELAND HAS suffered from an “old politics” of clientelism during the economic boom and bust, University of Oslo sociology professor, Lars Mjöset, has said.

Prof Mjöset was speaking at the inaugural Raymond Crotty lecture at the Ireland Institute in Dublin on Saturday.

The lecture, themed I reland in Crisis: Radical Alternativeswas organised by the People's Movement, a group that campaigns against the development of the EU into what it calls a federal super-state.

Economist and journalist Colm Rapple introduced the event saying Raymond Crotty was best remembered for his successful 1987 Supreme Court challenge against the Irish Government’s attempt to ratify the Single European Act without a referendum.

Mr Rapple said: “Ray gave us the right to say ‘no’ and we did say ‘no’. Even though the ‘nos’ were reversed, it doesn’t mean we were wrong. A lost referendum is better than no referendum.”

In his lecture, Prof Mjöset, who wrote the introduction to Raymond Crotty's posthumously published work When Histories Collide, differentiated between two phases of Ireland's Celtic Tiger.

He said the first phase began in the 1990s, a point at which, “international finance was starting to become virtually unregulated”. He said that both phases of Ireland’s Tiger economy were influenced by international factors. In the 1990s, it was that shares in dot.com companies became speculative objects. “Speculation leads to a mania and the belief that the value of the object of speculation will rise and rise to heavens. But bubbles always burst,” he said.

In the second phase of the Celtic Tiger, he said that it was securities that turned into the marketable financial objects with subprime lending taking off in an unregulated environment.

Describing the domestic factors contributing to Ireland’s boom and bust, he said Ireland has suffered from an “old politics” of clientelism. In the 1990s, he said this was characterised by “scandals such as the Beef tribunal involving old parties” while in this decade, he said that local government, over-reliant on development levies, stimulated the property market and houses emerged as the new speculative objects.

The professor described the 1990s as the “idyllic period” of the Celtic Tiger years, when clever technical policies nurtured enterprise. However, in this decade, he warned that while having universities compete for funding may simulate market principles, it is not conducive to the knowledge sharing required for innovation.