Boom has weakened democracy

We are now at the end of an era. While the scale of last week's job losses at Intel may be relatively small, they represent a symbolic turning point. Everything suggests that the Irish economic miracle has passed its height and is now declining.

With luck, the decline will be gentle and even welcome, allowing us to calm down and think about the quality of life. Without luck, it will be rapid and nasty, forcing a society hooked on high expectations to go cold turkey and deal with agonising withdrawal symptoms. Either way, this is a good time to take stock.

What you see as the haze generated by white-hot growth begins to clear depends on where you are standing. The recent United Nations Human Development Report may define this State as richer than all other EU countries except Luxembourg and almost on a par with Canada. Yet how many of us really recognise this vastly wealthy place? What kind of wealth is it when people on decent incomes can't afford a basic house, when sick people can't get basic treatment and when many people with disabilities still live in an almost medieval atmosphere?

If the statistics on wealth feel deceptive, so do those on poverty. The growth that has created this wealth has also created jobs, and jobs, in turn, have made life appreciably better for many. As unemployment fell drastically, the extent of basic deprivation declined. By 1998, the most recent year for which we have figures, the percentage of households experiencing basic deprivation was just above 8 per cent: far too high, but a tangible improvement, none the less.

At the end of the boom, fewer people are dirt poor than at the beginning. While it would be utterly extraordinary if this were not the case, the reduction in outright squalor is obviously welcome.

Yet for many places and many people, very little happened in the boom years. As is revealed by the Western Development Commissions State of the West report published today, in the supersonic boom years of 1995 to 2000 counties Donegal, Sligo, Mayo, Leitrim and Roscommon gained just 439 IDA or Forfas-backed jobs between them. Donegal actually lost 1,669 jobs in the period. Leitrim, Sligo and Roscommon stayed almost exactly where they were.

For many people, moreover, what the boom meant was simply the chance to go from absolute poverty to relative poverty. At some point in the period from 1994 to 1998 a huge part of the population knew what it's like to be on the outside, surviving on an income less than 60 per cent of the national average. Half the people in the ESRI's recent Living In Ireland survey (the most intimate measure of economic well-being we have) fell below the 60 per cent relative income line at some stage between 1994 and 1998. Two-fifths of the sample were under the 60 per cent line for two or more of the five years.

As some parts of the society have powered ahead, moreover, others have been left further behind. More people are now living at less than half of the average income. Because the key factor for these people is social welfare, this is largely a result of deliberate Government decisions, especially of Charlie McCreevy's Budgets.

In 1994 the basic rate paid to a single adult on Old Age non-contributory pension was just above 50 per cent of average income. By 1998, it had dropped to 40 per cent. A couple with two children relying on Unemployment Assistance would have been comfortably above the 40 per cent relative income threshold in 1994, but below it in 1998. A lone parent with two children relying on social welfare would have been close to 50 per cent threshold in 1994 but below the 40 per cent line by 1998.

This is why the UN report shows Ireland with the second-highest concentration of poverty among developed countries, just behind the US and just ahead of the UK. The line-up is not accidental. One of the contradictions of the boom period is that the years of growth have pushed us more firmly into the AngloSaxon camp and further away from the European social model. The widening income gap was a result of domestic political choices.

Conservative economists (such as Sean Barrett on RTE Radio's This Week programme last Sunday) would argue that relative poverty doesn't really matter. If everyone is better off, why worry that some are more better off than others? The answer is primarily political.

Democracy itself is hollowed out by large scale inequalities. The notion of a shared public realm that is vital to a democracy becomes meaningless. Basic public services collapse. Public resources become prey to the greed of a rich elite. The political system is privatised through the effects of corruption. When their basic life experiences make fellow citizens into incomprehensible strangers, the most essential word in any democracy, the little word "we", becomes unusable.

Can anyone seriously deny that these effects are now tangible and that, as a consequence, Irish democracy is in serious trouble? The rapid change that has been fuelled by economic growth hasn't just made the place seem strange, it has made us strangers to one another. As the haze clears, too many of the faces we see are unrecognisable.