OPINION: This administration has failed the people – with the exception of its supporters in banking and construction
FOR A number of weeks we’ve been listening to commentators telling us about the good job the Government is doing sorting out the economy, some of them in the pay of the Government, some not.
It’s all a bit hard to take.
Our Government’s first priority is taking good care of the interests of the rich and powerful, its citizens come a poor second. I see no logical reason for using the taxpayers’ money to rescue the banks.
When the bank guarantee scheme was announced last September, we were assured the Government was familiar with the banks’ true state of affairs. For their sake, I hope they weren’t.
The same administration told us that Anglo Irish Bank would not cost the taxpayer money. Can you believe it? And they still have their jobs. This is the same Government which told us they would bring transparency to the financial system. They then replaced Anglo’s top men with more Anglo personnel – nothing like keeping it all in-house.
Then they go and appoint Arthur Cox as the legal adviser to Nama, the National Management Asset Agency. Arthur Cox is already advising the Department of Finance on the legislation establishing Nama; and for good measure, it advises Bank of Ireland – one of the biggest clients of Nama.
More transparency?
Despite the financial, economic and social disruption caused by the banks’ incompetence and hunger for money, the reason they get away with it is because governments let them. Politicians are afraid of interfering with the general culture of wealth-creation.
Neoliberal economics, as propagated by the Milton Friedman school of economics and championed by Ronald Regan and Margaret Thatcher, told us that the market was good and state intervention was bad. Gradually, Keynesian full-employment policies were abandoned, markets deregulated and the notion that “greed” was good had arrived. All we had to do was trust big business and everything would be grand.
Last week German finance minister Peer Steinsbrüeck pointed out that despite our banks receiving liquidity from the European Central Bank (ECB) at record low interest rates, they were not passing it on to borrowers: “The banks prefer to put this money into trading currencies, bonds or shares instead of passing it on in the form of loans.”
The Government now owns, or has a share, in many of our banks. In China, where a government-driven stimulus plan is helping to accelerate growth, the state doesn’t just own the banks, it controls them – an oversight which their Irish counterparts lack.
Our Government can tell the bank to lend to small business but they will only do so when it suits them. Right now they don’t feel like it, and Brian Lenihan can throw all the money he likes at the banking system but it doesn’t mean they’ll start lending again. Banks that would be bust without taxpayers’ money are now pushing up interest rates, in an effort to improve profit margins even though the European Central Bank (ECB) left rates alone.
Moreover, having been bailed out by the taxpayers, they will now proceed to shaft that same taxpayer who is still reeling from the impact of the recession. It’s very interesting how it all works: a banker makes the decision about how much risk to take with the money, gives himself a bonus for doing so while someone else bears the cost if things go badly wrong. Nice piece of business.
In his book The Black Swan, Nassim Talab tells us that “banking is not about true risk but perceived volatility of returns – you earn a stream of steady bonuses for seven or eight years, then when the losses take place you are not asked to disburse anything. You might even start again, after blaming a systemic crisis for your losses.”
He insists that there should be no incentive without disincentive and “never trust with your money anyone making a potential bonus”.
Just because people in power elsewhere might be doing something similar doesn’t make it right. The human being’s regular failure to deal with power in a healthy fashion is not particular of this country. We didn’t elect them but we did elect our own and we would prefer if they stopped pretending that the neoliberal agenda of the last 30 years has not been discredited.
How about adapting the mantra: “what’s best for Ireland is what’s best for its people”, and governing accordingly. Wouldn’t it be great if our esteemed leaders were prepared to work to ensure that there was equality of opportunity in education for all the citizens of the state, rather than helping to promote the socially divisive private school system?
Wouldn’t it be great if our leaders were determined to provide a fair healthcare system for all? And it would be useful if they had a plan geared towards reducing the gap between the rich and poor which, thanks to their help, has continued to widen.
And lastly, if only the turkeys would vote for Christmas and start working on legislation which would eliminate all junior ministers and reduce TD numbers from 166 down to 66.
No doubt my wish list would not solve all our problems, though I do feel that it would represent a start in the right direction.
Mick Wallace is managing director of Wallace Construction Ltd of Dublin