Views that banking was just one part of the crisis and that the public sector was not to blame have been ignored, writes FINTAN O'TOOLE
LET’S START with a short quiz. Who wrote the following? “Much of the rhetoric in the media about public sector pay and reform is an attempt by some of the least well-informed commentators to distract attention from the main source of our economic woes. The mess in which the Irish economy finds itself largely stems from the house price bubble, not from problems in the public sector. It is probably not a coincidence that some of the most vocal critics of the public sector today were among the most conspicuous cheerleaders for the housing boom.”
Was it (a) Peter McLoone; (b) Jack O’Connor or (c) David Begg?
And who wrote this? “There are five dimensions to Ireland’s current crisis: a banking crisis, a fiscal crisis, an economic crisis of competitiveness and job losses, a social crisis of unemployment and income loss, and a reputational crisis . . . it cannot be said that an integrated and evolving debate is occurring on the fiscal, social and economic aspects of the crisis.”
Was it (a) Michael D Higgins; (b) David Begg; or (c) Me?
The answer, in both cases, is none of the above.
The first quote is from Alan Ahearne, now special economic adviser to the Minister for Finance, Brian Lenihan. Writing in The Irish Timesin January 2009, he went on to point out that cuts in public sector pay, though necessary, would have a relatively modest effect on the budgetary crisis: "an often overlooked point is that even large-scale public sector pay cuts would only have a moderate effect on the fiscal deficit. A 10 per cent reduction in public sector pay and pensions, for example, would reduce Government spending by €2 billion. But when account is taken of the associated loss of tax revenues (both direct and indirect), the net reduction in the budget deficit would be a little more than €1 billion."
The second quote is from the National Economic and Social Council. It represents the view of the actors in what used to be social partnership. It is endorsed by the trade unions, the representatives of six different Government departments, of Ibec, and of community, voluntary, environmental and agricultural groups. The council’s message, in reports last spring and autumn, was that the banking catastrophe is just one of five crises and that there are thus “definite limitations to a national response which was dominated by a focus on recapitalising the banking system”.
In both of these propositions, we are dealing with highly respectable, mainstream, orthodox opinion. When Ahearne wrote 15 months ago that attacks on public servants were intended to “distract attention from the main source of our economic woes”, he was being rational. His view was uncontroversial enough for Lenihan to bring him into the Department of Finance and make him the intellectual architect of Nama.
And when the NESC suggested there were five crises, not one, and that allowing the banking system to dominate all policy responses would not work, it was reflecting a broad consensus. No one argued against its emphasis on “the need to convince Irish society as a whole, and particularly groups making visible sacrifices, that those who led Irish financial institutions into their current reliance on the State, and who were major beneficiaries of the boom, are being held accountable and bearing their share of the adjustment burden”. When it talked about the need for a coherent response to be “based on social solidarity, seen as sharing the burden of adjustment fairly and yielding a fair economy and society in years to come”, it was almost dealing in truisms.
I cite these two examples in order to suggest that something extraordinary has happened to our public discourse about the crisis. Given the right-wing domination of our political and media cultures, it is not at all odd that radical dissent has been marginalised. (Even the word “marginalised” suggests, wrongly, that it was anything but marginal in the first place.) What is much harder to grasp, however, is that mainstream, rational analysis has been marginalised too.
If Alan Ahearne were now to write in The Irish Timesthat the targeting of the public service is a transparent ruse to distract attention from the real causes of the crisis, he would be dismissed as a Marxist conspiracy theorist. As for the NESC, it doesn't even merit dismissal. It simply doesn't exist. It is roundly and comprehensively ignored. Its intellectual framework of a five-dimensional crisis has no place in the one-track mind of official discourse. And this, remember, is a body chaired by the secretary general of the Department of the Taoiseach.
The ultimate irony of this marginalisation of the mainstream is that it now encompasses those who believe in that weirdest of ideologies – capitalism. The poor saps who actually thought there was a system of private enterprise, in which investors took the risks of failure as well as the rewards of success, are now as heretical as the rest of us.