This half of the Politics blog has been away for the past couple of weeks. The village in the Swiss Bernese Oberland that I stayed in had the connectivity of rural Ireland. That, added to the extortionate rates that O2 charge for data roaming abroad (and I’m sure it is no exception) meant that little news from Ireland came through.
I write this on my first day back, having no knowledge of the Bord Snip Nua report other than a couple of headline cuts it has proposed, plus its overall target. I also know that when I get a chance to trawl through it, little will surprise me.
There are a couple of general philosophical points to be made about the McCarthy group, its remit and its outlook. My colleague’s Fintan O’Toole’s column today (read it here) demonstrates amply the narrow ideological base of the group and the skewed outlook they may have on what some people in society should except and what others in society deserve.
There has been a reaction to the crisis in the media, among the oppositon, and among sectoral and vested interests that has – to be polite about it – been pavlovian; and – to be impolite about it – has been of the headless chicken variety.
State revenues and expenditure form only a portion of the wider economy. Sure, the numbers of public servants employed, and their salaries, have risen disproportionately and need to be corrected (ie lowered). But you’d swear, reading and listening to some of the commentary, that grasping and grabbing public servants are the whole of the problem. They are not.
The Government, through soft-policy solutions like benchmarking, facilitated the huge increase in spend. On the other side of the equation, it placed a reliance and trust in temporary windfall tax revenue as if property prices would continue to raise adinfinitum.
Its biggest crime, though was to allow the continuation of property tax breaks for hotels, city centre developments, apartments, shopping centres etc long after there was a need for them. Both Charlie McCreevy and Brian Cowen as Ministers for Finance promised to end the schemes. But they both tarried. And allowed them such long phase-out periods that the greedy glut that the schemes encouraged continued apace.
How many tax-break hotels have been built in Ireland over the past 15 years? How many rooms have been added? By what multiple do they exceed the actual tourist demand? Did any of the fancy spas and leisure complexes attached to every hotel in the country ever make a profit? How many will now go to the wall even with the benefit of genorous tax incentives?
There are other wider questions about the society that we created collectively over the past ten years. And about the communal denial that the good times would ever end. It was viral – few remained uninfected by the disease.
The details of McCarthy are details. They will be debated and parsed, tweaked, amended. The more fundamental questions are of a much broader nature. And they are the ones that need to be addressed. There are questions about the banks, driven by greed, going AWOL from their senses and driving their own foreign borrowings up from 7 per cent of GNP to a stunnign 45 per cent within a decade. It’s what happened with derivatives and sub-prime loans in the US. They were repackaged. And even though they were dodge, the financial houses put pressure on the three rating agencies to give them triple A. And because of the hype and the frenzied auction atmosphere, they all capitulated.
Same here. Banks bowed over one another to give bad loans collateralised on bad loans. We gasped at how bankers were stupid enough to approve loans to that shyster Michael Lynn. But he wasn’t an exception. The more we learn, the more we realise that his case was the rule.
I agree with Dan Boyle that at least some of those wearing snazzy ties and bespoke suits should have porridge on their breakfast menus for at least a couple of years.
Nobody questioned the orthodoxies then.
And nobody is questioning the new orthodoxies that have replaced them now.
One of the most unfortunate aspects of a settled democracy is that all the political parties come up with solutions that differ remarkably little from each other.
What should we be questioning?
I claim no expertise and can promise no exhaustive list.
But these are some of the questions that have occurred to me. Nor can I provide any real answers?
Are cutbacks in public services the only options open to the Government?
Is our society really too small to try some form of stimulus package?
Will getting public borrowing back to within 3 per cent of GDP by 2013 actually cause more damage than good, by flooring all acitivity within the economy?
Should bond holders (specifically senior bond holders) be protected at all costs and treated exactly the same as depositors? Was there no risk inherent in their investment?
Why did nobody question the orthodoxy that prevailed about low taxation for a decade, when it was clear it was all being funded by a property bubble? Why did Fine Gael, Labour – and even the Greens and Sinn Fein – fall into line on those?
Why the focus on public spending and the banks? Where are the ideas in relation to the wider econonomy?