Diarmaid Ferriter: Echoes of 1974 in today’s cost-of-living squeeze

Such is the level of apprehension about the coming winter and the cost of living that it brings to mind the Ireland of almost 50 years ago. The consequences of the oil crisis prompted by the Arab-Israeli war in October 1973 were profound and diluted the optimism that existed about Ireland’s economic prospects as a new member of the EEC.

In December 1973, the minister for finance, Richie Ryan, spoke gravely when addressing the Seanad: “Our entire future is threatened by a combination of the oil crisis, inflation and soaring interest rates.” There was talk of petrol rationing books and blackouts. Ireland was dependent on oil for 75 per cent of its energy needs and the price of oil quickly quadrupled, while the cost of food and basics also spiralled.

The Fine Gael-Labour coalition government in power from 1973 to 1977 was inevitably in crisis mode as a result; national wage agreements, subsidies and welfare increases to counter and stay ahead of inflation were part of the response. Ryan fought with his colleagues about spending plans while the governor of the Central Bank, TK Whitaker, wrote increasingly urgent letters to Ryan telling him in 1974 that he was “appalled” by the information given to him in confidence by Charles Murray, the secretary of the Department of Finance, about the scale of borrowing to finance additional current expenditure: “I wrote in dismay last March to Mr Murray that effective management of our financial affairs seemed to be slipping out of our hands ... I am most disheartened by the prospect ahead.”

Whitaker declined to serve a second term, his decision largely a result of the refusal to heed his warnings; interestingly, he also used a phrase, a version of which later become infamous when used by Charles Haughey in January 1980 shortly after he took over the leadership of Fianna Fáil: “As a community we are at present living vastly beyond our means.”

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The cost-of-living ache also worked its way into popular culture, notably through the character the minister for hardship on the RTÉ satirical show Hall’s Pictorial Weekly, played by Eamon Morrissey, mitten clad, in darkness save for a candle as he spoke of the reopening of the workhouses: “I want to convince you how well off you are no matter what the other crowd tells you ... My government is the best government you have at the moment, so make the best of it.” It’s a line that some in power might utter today in responding to the populism of “the other crowd” — Sinn Féin — and its constant demand for more and more State spending. Of course the context now is different, with a large budget surplus, and tax cuts mooted, but the same political reality about State intervention and the cost of living defining the political narrative and shaping political preferences holds true.

One lesson of the current energy crisis is that alternative, sustainable sources of energy have to be the overwhelming priority

The cost of living sank the 1973-1977 government’s prospects of re-election even though the Irish 1970s was by no means a linear tale of economic woe and some stabilisation was apparent by the end of that government’s term. But what was striking was the gap between those prospering and those crushed by inflation, which an EEC report in November 1976 estimated was at 18.9 per cent, the highest in the community. Economist Patrick Lyons highlighted that 70 per cent of the wealth of the country was in the hands of 5 per cent of the population, a reminder, as noted by Magill magazine, of the polarisation between “those classes and sections of classes which are ahead of the inflationary game and those which are not”, another assertion that resonates today.

There are other aspects of the global energy crisis of the 1970s that are relevant today; what happened from 1973-1974 prompted not just a focus on energy conservation but an urgency about alternative energy supplies and research in to renewable energy, reflected, for example in a new department of energy in the United States and, in Paris, the International Energy Agency, and a focus on expanding nuclear power and gas exploration. These efforts also generated increased concern about safety, natural resources and the environment, as was apparent with the rise of the ecology/Green movement.

One lesson of the current energy crisis is that alternative, sustainable sources of energy have to be the overwhelming priority. Cost-of-living headlines will always trump climate-change headlines, but the reality is that current, painful inflation dilemmas are little when measured against the enormity of what we have yet again been reminded of this week by another climate-crisis report. Co-ordinated by the World Meteorological Organisation, this report predicts “increasingly devastating” physical and socioeconomic impacts of weather, climate and water-related disasters in the absence of more urgent action. A big part of the answer to that challenge must surely lie in wind energy, onshore and offshore, and the Irish approach to this, given our particular potential to harvest it, requires a lot more urgency.