Fintan O’Toole: Ireland is now an upside down Celtic Tiger world

Generals always fight the last war. It is hard to blame them – what else can human beings do but draw lessons from what happened before and try to apply them to the next set of events? Yet in doing so they lose sight of radically new circumstances, ordering the cavalry to charge at machine-guns or building impregnable Maginot lines that a mobile enemy swerves around.

Ireland's current political impasse arises because we have been fighting the last war. We got hammered and humiliated in the great Celtic Tiger crusade. Our invincible Grand Armée, the boom of whose artillery was always getting boomier, met its Waterloo on St Stephen's Green in the headquarters of Anglo Irish Bank.

The trauma of that defeat is imprinted on both the private and public sides of the Irish mind. As it should be – we would be idiots not to learn from the mad years between 2002 and 2008, when a genuine economic transformation was distorted into a lottery-winner’s fantasia in which we borrowed vast amounts of money to buy bits of Ireland from each other.

A good chastening was undoubtedly in order, and we got it hard. The comeuppance had elements of the fall of Icarus and the expulsion from the Garden of Eden, but without the tragic grandeur of either.

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The last war was a disastrous credit-fuelled bubble. We were the Borrowers. So what are we doing now?

But that is the last war. And the underlying reason why Irish politics is in turmoil is that, at both private and public levels, we have been fighting the enemies of those years: hubris, delusions of grandeur, overspending, losing the run of ourselves.

And what we have created in doing this is that Celtic Tiger world turned upside down – whatever we did then, do the opposite now.

Consider, for example, debt, or as it was conveniently renamed, credit. The last war was a disastrous credit-fuelled bubble. We were the Borrowers. So what are we doing now? We’re turned into the Savers.

Positively Germanic

At the height of the Celtic Tiger, Irish households saved €6 for every €100 they earned before tax. Now they are saving €10.60 for every €100. On top of this Irish households have paid off a staggering €43 billion of debt over the last 10 years. We’ve become positively Germanic.

This cultural shift is undoubtedly driven by the memory of bitter experience. But it has also shaped a public mentality of extreme, and, indeed, excessive caution.

To take the most dramatic example, the perceived problem was that the State intervened too much in the housing market (through crazed incentives to developers) and the (wrong) answer was that the State should leave housing to the private market, which would take care of it through the infallible response of supply to demand.

More broadly, the lessons of the last war as our generals of policymaking understand them are twofold: don’t spend money on big projects and for pity’s sake don’t do social partnership ever again.

In the disaster movie that plays in the heads of those who run the country the hubris that led to our nemesis is embodied in images of Bertie Ahern closeted in sweaty rooms with trade union leaders before emerging with lists of grandiose promises and commitments to hire more public servants.

But the Ireland of 2020 is not the Ireland of 2007. There is, indeed, an economic boom: more people are at work now than they were before the crash, and the number has grown by a remarkable 25 per cent since 2013.

However, it is not the same boom. It is not fuelled by credit. It is not a property bubble. It is driven by investment. And it is placing an intolerable strain on every aspect of our physical and social infrastructure.

We actually need the very things that the Celtic Tiger scared us off from: large-scale public investment and some form of structured social dialogue

Think, for example, of public transport. In 2007 there were a record 260 million journeys on public transport, and everyone knew the squeeze was becoming unbearable. In 2018 there were 268 million journeys. This figure surely rose last year, and will be even larger this year.

Everywhere you look in Ireland you see the evidence of the gap between an expanding population, economy and workforce on the one side, and lagging public provision on the other.

The disconnection between the economic boom and real quality of life is obvious, and it has created the demand for radical political change.

Overheating

Yet the generals keep fighting the last war. Their warnings to any new government? Don’t spend a lot of money because you might “overheat the economy”, code for doing the Celtic Tiger all over again.

Yet the problem is not an overheating economy, it is that the economy is a cold place for people who are looking for housing or healthcare, or who just want to get to work in the morning without having a nervous breakdown.

We actually need the very things that the Celtic Tiger scared us off from: large-scale public investment and some form of structured social dialogue about how to do it and how to pay for it.

The real lessons we need to learn are about doing those things better – more openly, more rigorously, more justly, more sustainably.

If we go on fighting the last war we will lose the battle to turn soaring economic statistics into real prosperity.