Money 'saved' on investment in poorer communities is money borrowed from the future – at high interest, writes FINTAN O'TOOLE
‘WE ALSO in this island are growing an odd and mad people. We were odd before, but I was not sure of our having the genius necessary to become mad. But some late steps of a public nature give sufficient proof thereof.’ – George Berkeley, bishop of Cloyne, 1736
I recently dug out a report published in 1994 by the Paul partnership of voluntary organisations in Limerick city. It is about four parishes whose names were not yet nationally infamous: Ballinacurra Weston, St Mary’s, Moyross and Southill. It describes the long-term unemployment that had resulted from the loss of traditional industries. The parishes had become ghettoes for people dependent on welfare and were increasingly isolated from the rest of the city.
The figures in the report are stark, especially for the young: 50 per cent youth unemployment, 24 per cent early school leaving. The report warns of “an extreme degree of social exclusion for a minority of the city’s population”.
Irish governments allowed this situation to emerge because, allegedly, there was no money. We know the result. John Fitzgerald, in his official report three years ago, described the situation in Moyross and Southill as “in many respects quite shocking. The quality of life for many people is extremely poor”. Parts of these estates were taken over by vicious gangs striving for control of the drug trade. The children who were unemployed and dropping out of school in 1994 were given a choice between long-term poverty and lucrative gangsterism.
The cost of allowing these parishes to fester was borne primarily by the decent majority who live in them. But the contagion spread, as Fitzgerald put it, to “previously settled areas”: “The intensity and nature of criminality and antisocial behaviour is destabilising, not just for these estates, but also for the city more generally.”
It has been, indeed, destabilising for the entire State – those gangs have come close at times to undermining the criminal justice system.
Leave aside for a moment the hideous human cost. In pure financial terms, the bill is huge. Fitzgerald called the problem “a real threat to commercial and social life in Limerick city as a whole”. What’s the price tag for extra policing, for trials, for prison places, for drug treatment, for burned-out houses and for lost investment and development? Without counting the wider economic cost of blighted lives, we are surely looking at many hundreds of millions of euro.
The moral argument for drastic cuts in public support for vulnerable communities and families is that without them we will be passing debt on to the next generation. In reality, with such cuts, we will be passing on far bigger debts. Even in financial terms, money “saved” on investment in children, in families and in communities is money borrowed from the future – at an interest rate that makes the bailout look like a giveaway.
There is a fundamental dishonesty in the economics of slash-and-burn cutbacks. It ignores the known financial costs of mass unemployment, poverty and inequality. Those costs are well established by empirical evidence. Intervention in early childhood is a spectacular investment: US longitudinal studies show that every dollar spent on preschool education yielded a return of $16 in increased earning power, taxes and reduced demand on the criminal justice system.
Poverty and inequality, as well as being corrosive of democracy and decency, are incredibly expensive. An EU study has estimated that the health effects of inequality alone account for 20 per cent of the total costs of healthcare and 15 per cent of the total costs of social security benefits. In Irish terms, this means a cost of at least €5 billion a year.
Cutting social services is often an exercise, not in reducing costs, but in recategorising them – usually from a relatively cheap heading to a very expensive one. Reducing home help for elderly people shifts more of them into acute hospitals and nursing homes. Not helping a child with learning problems early on means either that the problem will be treated later when it is much worse or that it will not be treated at all, making it likely that the child will grow up to a life on the dole. Cutting drug treatment in the community means we’ll end up doing it in prison – at a multiple of the cost.
Refusing to literally count these costs is not just bad policy, it’s bad accounting. It’s another way of cooking the books – all the known fiscal consequences of a decision are kept off the balance sheet. For all the claims of fiscal responsibility, this is just like a company parking known liabilities in offshore vehicles. It is the social equivalent of companies that pollute the environment and claim to be generating wealth.
We do need fiscal rectitude, but reckless cutting is fiscal vandalism. A real budget would ask two questions: what do we get if we spend this money and what do we get if we don’t? Today’s exercise in sado-monetarism will ask neither of them. It is a mere continuation of the State’s fatal habit of ignoring consequences.