ECONOMICS:Improving health and education against a backdrop of financial stability is attainable, writes LIAM DELANEY
THE THREE million or so inhabitants of the newly fledged Saorstat Éireann must have reflected with some awe on how they had arrived at their newfound independence and looked to the future with a large degree of worry and uncertainty.
By 1988, a series of failed starts followed by dramatic downturns had confirmed for many the view that independence was a strong political statement but an overambitious economic venture. Years of forced migration, stagnant growth and rampant unemployment was indicative of a small country trying to shake off its former masters but finding only economic ruin.
Growth rates during the 1990s gave Ireland a hallowed place in the global economy, achieving the status of “Europe’s shining light”, in the view of the Economist. Victory had been snatched from the jaws of defeat. Such is the narrative, yet it conceals much. The new State inherited rates of infant mortality that were high by international standards and by the mid-1940s, infant mortality in Irish cities was still as high as 10 per cent. Sustained improvements over the next 30 years succeeded in rapidly reducing these rates and dramatically improved the early childhood conditions under which our current older population entered the world.
People born in the 1970s and 1980s were almost six centimetres taller than people born during the 1920s, a testament to massive public health improvements that took place during this period. Up to 1980, life expectancy among the over-65s had not improved and were among the lowest in Europe. Despite poor economic performance, that too rapidly improved during the 1980s.
The migrants sent from Ireland in the 1970s and 1980s live now in relative conditions abroad far better than migrants previously and their children are doing better, at least partly a consequence of the better education the migrants took with them to their new homes. We made all this progress while still largely an economic failure, so we should not accept no welfare gains were achieved prior to 1990.
We approached the Celtic Tiger era with a population that was healthier and stronger than previous generations, but unable to shake its biggest welfare problem, unemployment. In the early phases of the 1990s boom, there was a palpable increase in confidence and well-being. A healthier population was becoming happier, fuelled by increasing societal openness and opportunities in the labour market and the continuing eradication of unemployment.
By 1994, Ireland was very near the top of any global measure of subjective well-being, yet darker sides were emerging. Male suicide rates were increasing at a scale mirrored in few countries other than those experiencing system collapses. Psychological well-being indices reveal that while job and financial satisfaction were improving, core measures of psychological distress remained static from the mid-1990s.
Part of this reflects the fact that we judge our position relative to others. For many, dramatic rises in consumption were ways to keep up with their social groups, an economic form of running to stand still that cannot bring contentment in a psychological sense. Status consumption spiralled, bubbles formed in property and a distraction from human welfare led to living patterns that, in hindsight, could not have done anything other than trap people in large debt and create expectations that no economy can sustainably deliver. What can we learn from focusing on human welfare as a core objective? Any summary must omit many important details, but the basic issues are clear. Unemployment has effects on well-being that rival chronic illness. Being unemployed has effects on immune function and general psychological health that are independent of financial loss and the reduction in unemployment, while it lasted, was one of the unambiguous successes from a human welfare perspective of the Celtic Tiger.
Furthermore, those who have a housing debt that is becoming increasingly significant relative to declining incomes are in danger of severe psychological distress. The potential financial wipe-out of this cohort of young productive people, who obeyed societal norms of working hard and buying a home, is a hangover from the Celtic Tiger that threatens to leave a permanent structural imprint.
Focusing on keeping these people in the game is of paramount importance. A stabilisation strategy that sees 500,000 people in unemployment, many of the newer entrants with large housing debts, is unthinkable.
If we focus on core health and education improvement as a long-term objective and, in the immediate term, focus on the mortgage arrangements of those who bought their primary dwelling from 2002 onwards and ensure that employment stabilises, we will avoid the worst psychological outcomes. Policies geared towards these two issues take place against a pressing need to stabilise the banking system and control the public spending deficit, but must be developed coherently and urgently.
Eight per cent growth is not needed in a wealthy state – full employment with modest growth and a society that focuses on its health and education rather than debt-fuelled consumption is a model that, planted back in 1999, would have avoided much of what we see now and is attainable, even in the current bleakness.
Dr Liam Delaney is an economist and senior researcher at the Geary Institute, University College Dublin
