Paschal Donohoe reviews ‘best overall assessment of recent Irish politics’

Austerity & Recovery in Ireland: Europe's Poster Child and the Great Recession

Author: William K Roche, Philip J O'Connell and Andrea Prothero, editors

ISBN-13: 978-0198792376

Publisher: Oxford University Press

Guideline Price: £60

I have only one good memory of the protests during the troika era. As a cycling backbench TD I careered into Kildare Street one morning, on my way to Dáil Éireann, to find myself amid a large farmers’ protest. Before I knew it I was in the middle of their demonstration. Stuck on my bicycle, I could neither reverse nor progress.

As a TD representing the centre of Dublin I was barely familiar with the reason for their discontent. The potential for embarrassment was large. Thankfully, good-natured protesters recognised my plight.

The crowds parted, allowing my arrival at Leinster House, through the tractors and by a phalanx of bemused gardaí. I was cheered faintly when I reached the front gates.

No other memories were pleasant. Nor should they be. The anger permeated through Leinster House as decisions were made to deliver an effective exit from a bailout programme. Discussions between colleagues, on contentious votes, ended on how long we would need to wait to leave the building before the protests diminished.

As collapse is, thankfully, replaced with growth, the economic and political analysis of that period is immense. This is deserved and necessary; if the fall was abrupt and profoundly traumatic, then the subsequent recovery exceeded most expectations. However, a recovering economy is not the same as a healed society. The hurt straddled too many dimensions and was too searing.

Austerity & Recovery in Ireland: Europe's Poster Child and the Great Recession seeks to analyse these many dimensions. Two substantial features distinguish this collection from other analyses. First, it covers both austerity and recovery. Most studies focus largely on cuts in spending and the consequences of participating in a bailout programme. Very few place these decisions in the context of the recovery of national solvency and the return to employment. This allows a more rounded assessment of policy decisions. Secondly, a multidisciplinary approach is adopted. Economists are joined by sociologists, legal scholars, migration analysts and industrial-relations experts. This collection is not all about bond yields.

This broader spectrum yields some of the strongest chapters. William Roche and Philip O’Connell, who also edited the book with Andrea Prothero, offer substantive yet succinct analyses of huge changes in industrial relations and the labour market.

A fascinating chapter about consumption details the immediate change in spending habits as a result of sharp reduction in wealth and income. An analysis of the recovery contends that many of these changes have become normalised.

David Farrell acknowledges a long list of political reforms introduced by the last government, from gender quotas, changes in the funding of political parties, and strengthened whistleblowing legislation to the introduction of the Citizens’ Assembly. He correctly points to the pivotal role of my predecessor, Brendan Howlin TD, in these achievements. Despite acknowledging the “potentially system-changing” nature of these reforms he barely musters the enthusiasm to describe them as “distractive”.

“Careless state”

No such equivocation is to be found in the chapter on inequality, which argues that “Ireland was and remained a careless state in the sense that government disregarded the needs of some of its most vulnerable and powerless citizens”. Huge harm and hurt happened in Ireland during the crash, but to suggest that the last or indeed any recent government set out to harm our own citizens is redolent of the populism that could yet wreak havoc across hitherto established democracies.

The chapters on economy and international relations offer a thorough assessment of policy decisions. Brigid Laffan contends that the crisis tested the ability of our institutions to “adapt to a politics of asymmetry”, where the openness and smallness of our economy altered the balance of power when dealing with international creditors and institutions.

Our economic choices are analysed in a series of papers that document the road to ruin and then fiscal, industrial and banking policy responses. The sheer magnitude of the budgetary correction is recalled: €11.5 billion of new tax revenue was raised; €25.5 billion of public expenditure reductions were delivered. In sum this equalled nearly a fifth of our national income. Paul Teague notes that, while this was comparable to other bailout countries, our economic recovery was pronounced and distinctive.

The difference is explained in a sweeping sentence, backed up with authoritative analysis, from Stephen Kinsella, who concludes: “Ireland is a beautiful freak, whose institutional make-up, and relatively high levels of expenditure on social programmes, cushioned the impact of austerity on large sections of the population, while its exporting sectors managed to rebound earlier, and keep growth much higher, than in other countries facing the same fiscal problems.”

Many of the contributors argue that this very economic openness, combined with the strength of our industrial-relations mechanisms, undermined the notion of an Irish economic template for redeployment across the euro zone. This very openness is now the source of new risks, and also opportunities. This is teased out by many contributors whose essays contain insights and acute observations. How much we have all learned will be tested as we respond to Brexit and a volatile international environment.

Chapter after chapter reaffirmed my experience in and supporting government across that period. If a country becomes insolvent there are no good choices available. Decisions are etched across a wide spectrum of searing difficulty. The best and least awful choice were often the same thing. The technicalities of micro and macro prudential polices are code for making sure we do not end up in another such crisis.

I disagreed with a number of the contentions of the authors, but the many strands of ruin and gradual but not complete recovery are dealt with in a style that is both scholarly and accessible. This richness makes it the best overall single-volume assessment of our recent political and social experience.

Paschal Donohoe is Minister for Public Expenditure and Reform