The decision to use all our resources for banks is a decision not to do many other things, but that is all manageable, writes FINTAN O'TOOLE
THE NEW buzz word is “manageable”. In recent weeks, the governor of the Central Bank, the ESRI and the director general of Ibec have all used it in relation to the cost of the bank bailout.
Which raises the question: manageable for whom? Well, it’s certainly manageable for Bank of Ireland chief executive Richie Boucher who is, in all but name, a public servant. His pension was topped up by €1.5 million of our money last year, so that he can retire at 55 on €368,000 a year.
It’s manageable for his predecessor, Brian Goggin, whose pension is reportedly worth about €650,000 a year. And for Denis Casey, who resigned from Irish Life after the jiggery-pokery with Anglo Irish was revealed, and who received a little package of €4.5 million to keep the wolf from the door. And of course for Michael Fingleton, who retired from the now-bankrupt Irish Nationwide with a pension pot of €27 million.
All of these gentlemen will selflessly struggle on through the bank bailout, and manage somehow.
And so will many others. When the winds howl, some people will be very well insulated. New figures produced last week by Gerry Hughes of TCD show just how eco-friendly the wealthy are when it comes to their own futures. Analysing the accounts of 45 large Irish companies, Hughes found that “if the average executive director were to take immediate retirement he would have a pension 15 times greater than the income of the average single pensioner, and that the average value of an executive director’s pension fund amounts to nearly €4.7 million compared with €102,000 for other employees”.
So, sure, the struggles of the next decade are perfectly manageable for bankers, executive directors, government ministers and senior civil servants, all of whom can take shelter in lavish pensions that are funded by the rest of us either directly or through extremely generous tax relief. Many of those who shape public debate on these issues can well afford to be sanguine about the cost of the bailout.
Ibec’s Danny McCoy, for example, suggested in these pages last week that the true cost of the bank bailout is €3 per day per household, “a fraction of the cost that has been erroneously suggested by some commentators” – principally, I suppose, me. This is in itself an enormous cost (and, to be fair, Danny McCoy did not deny this), but even so, it makes things sound rather better than they are. In the first place, it assumes that Nama will not cost us a cent and that the Anglo Irish black hole will not get bigger. It is hardly alarmist – after the revelation by Nama’s Brendan McDonagh last week that just 33 per cent of the loans it is taking on are producing any income – to think that this is extremely optimistic. And Anglo itself admits that the full extent of its liabilities are still unknown.
Secondly, expressing the cost “per household” is a neat way of minimising it. Households (many of which are headed by those who are unemployed, retired or dependent on welfare) don’t produce income – workers do. It is ultimately from the wages of workers with an average take-home pay of about €29,000 a year that the banks’ money will come.
With rising interest rates and a shrinking number of people at work, the ability of those workers to absorb these extra costs has to be questioned.
Let’s look at it another way. The sum total of foreign investment in Ireland last year was just shy of €10 billion. Even making the wildly hopeful assumption that Nama will break even, the cost of the bailout is €33 billion. Suppose we were to say that there would be no foreign investment in the Irish economy for three years. Would the great and the good be telling us that this was “manageable”?
Or suppose that I were to propose that we spend €33 billion over the next decade on eliminating child poverty. Would that be declared manageable too? Or would I be denounced as a reckless fantasist too thick to understand that we are in the middle of an existential crisis for this State and simply don’t have the money?
The bailout is not manageable for kids with learning difficulties whose chance to catch up will be gone in 10 years’ time. Or for couples who have lost their jobs and are sinking under unpayable mortgages. Or for people with mental illnesses who are still kept in miserably degrading institutions. Or for the young who will leave these shores in disgust and despair.
The decision to use all the resources we can scrape together for the banks is also a decision not to do many other things, among them making any real change to an Ireland that is deeply divided between those who make decisions and those who take the consequences.
The vast cost has moved, through a gradual softening up, from unthinkable to manageable. But the real assumption among those in charge is not that the money is manageable, but that the people are.