Greed can be good - when held in check by the State
I was invited back to my old school last week to take part in a debate of past pupils versus present pupils. The motion was: “This House considers that the reckless greed of the older generation has impoverished the youth of this country.”
Not surprising the past pupils were against the motion and the present incumbents of this particular bastion of privilege were for it. As it happened, the latter group lost. In fact they didn’t really have a chance – the past-pupils team included two junior counsel and had the services of one of the country’s better-known senior counsel as a kind of non-playing captain.
It was interesting, however, to find yourself mounting a defence of greed in the context of the Irish economic collapse. Paradoxically, it was quite easily done; it is really only a few steps from Adam Smith’s “animal spirits” to risk-taking, trade and widespread prosperity. Indeed the absence of greed – or not enough greed – is one of the things holding back the recovery as people’s fear and caution are preventing them buying houses and investing in businesses, as we informed the hormonally compromised ones to our right in no uncertain terms.
The caveat, of course, was that the consequences of excessive greed have to held in check by the State. And in Ireland’s case this didn’t happen.
The Irish are no more greedy or venal than the French or Germans; those countries just have stronger institutions. The government of the day failed to see what was happening in the economy and the banking system. They failed to take corrective action. Indeed many policies simply made things worse and the crash – when it came – much deeper. The institutions on which the government was entitled to rely, such as the Central Bank and the Department of Finance, were not fit for purpose.
“On that point, sir!” cried one of the callow blazer-wearing youths, jumping to his feet, “if the older generation voted in the politicians who were in charge of these institutions, then is it not all their fault and we win?”
‘Politics as normal’
Not quite. The older generation can be held to account for the quality of Irish politics and all that flowed from that, but it is not the same as saying they made their bad political choices on the basis of “reckless greed”. Collapse of stout party.
We vote people in for all sorts of reasons but a demonstrable ability to govern competently is rarely one of them. An almost perfect example was to hand last week in the antics of Kerry County Council where councillor-cum-publican Danny Healy-Rae succeeded in getting a motion passed calling for a derogation from the drink-driving laws for rural drivers and, in particular, for the drivers of small tractors.
Healy-Rae and his fellow publicans-cum-councillors claim to be motivated by genuine concern about elderly rural dwellers and their experience of the changes that have overcome this cohort.
And this brings us neatly to something in danger of becoming lost in the mounting excitement about exiting the IMF- EU-ECB funded bailout at the end of the year.
Bringing about meaningful reform is difficult in any democracy; it is particularly difficult in a country with a political environment as idiosyncratic – to put it kindly – as ours, Healy-Rae and his colleagues being a case in point.
The Government implemented a range of deeply unpopular measures not because they have discovered a new type of politics, but because they had no choice. If we did not deliver on our commitments under the troika deal, we would not have received the money to keep schools and hospitals open.
Some senior civil servants are privately concerned about the consequences of this stick being removed and a putative return to “politics as normal”. And it’s easy to see why, particularly as several measures such as the introduction of water charges, property tax and disposal of State assets will straddle the ending of the bailout.
From this perspective, the “precautionary credit line” the Government is negotiating with the IMF in its ongoing game of bluff with the Germans around bank debt concessions may actually be a good thing. Any sort of funding line would presumably have conditions attached that would counteract any politically motivated backsliding on the tough measures of the past few years.
Let’s hope Berlin has not been watching events in Kerry last week too closely.