We've screwed up - that's the truth


OPINION:The emergency Budget was seriously misconceived and our existing politics are incapable of resolving our problems. We are in dire need of political realignment and valued-based politics that eschews cronyism, writes RAY KINSELLA.

THE GLOBAL economic crisis, as it is manifest in the wasteland of what was once the Celtic Tiger, is now entering a final and arguably devastating phase. Our political institutions and systems of governance are coming under inexorable pressure in the face of inadequate policy responses to the rise in unemployment, the decimation of the domestic economy, and a palpable feeling of quite desperation among individuals and families and businesses.

The most recent assessment of the global economy by the International Monetary Fund – and its evaluation of Ireland’s financial sector – makes sombre but not unexpected reading. The most recent Central Statistic Office data for the final quarter of 2008 shows a sharp decline in investment. Meanwhile, the live register is now escalating and is set to reach new levels before the end of this year.

This would strain the most robust and inclusive political system. In the case of Ireland, which faces both local elections and a contentious referendum, there is every possibility that what has happened will test the limits of tolerance of a population that is not without experience of the pains of unemployment and emigration.

We are looking at a fracturing and realignment of political institutions which do not speak to the sensibilities of a young generation they have beggared, nor to the needs of those who felt themselves entitled to something better having contributed much of their lives to the development of the Irish economy.

The roots of this latent political crisis are – like those of the global financial crisis – starkly ethical in nature. We have a political system largely rooted in obsolete divisions and, in the view of many, emasculated of the values which once animated them. This is not to say there are not highly committed professional and ethical politicians; there are, and many will be, not without some courage, knocking on doors.

The tragedy is, they are a “dead man walking”. The defining characteristics of the system as a whole is a culture of power instead of service to the person. Our essentially adversarial political institutions have demonstrated little relevance to the imperative to restoring hope, and a sense of direction, at a time of unprecedented stress in modern Irish history.

It cannot be right that, for our legislature and political systems, it continues to be “business as usual” while, in virtually every other domain of our national life, the most painful adjustments are being made without consolation or consensus.

We have screwed up – that’s the truth of it. We cannot build a new capitalism on old politics. Rebuilding trust in our institutions and in our political system – as much in the financial sector – will requires a values-based leadership. The time for political rhetoric and the old fashioned ardfheis-based nonsense is long past.

Political institutions and the system of governance are semi-detached from the pulse-beat of individuals who have lost their jobs, businesses teetering on the brink of failure, and families that are crushed by the circumstances in which they have suddenly found themselves.

They are still dominated by an apprenticeship system, which favours those who have served their time over those who can contribute most to addressing the problems now confronting the country.

The system of ministerial appointments makes little or no sense. All too frequently, it is geographically-based. Even more fundamentally, they commonly lack the relevant expertise to direct, with a sure and experienced hand, policy in the departments to which they are appointed. There is no formal training required from ministers from their first day in office. This simply makes no sense. It would not happen in any other profession or vocation.

Our political landscape is littered by “silos”, each driven by their own agenda and political dynamic. There is the ambiguity of the relationship between, on the one hand, the legislature, and, on the other hand, the executive. This ambiguity leaves itself open to the “capture” of policy; it leaves itself open to the de facto delegation of key areas of responsibility to quangos of different kinds. Conversely, it can, and does, inhibit those within the public sector who have a real capacity to contribute, from putting their head above the parapet. The old political canard of the first priority on getting power being to retain it corrodes and demeans the very nature of what politics should be about.

The contradictions, ambiguities and inefficiencies in all of this, are all too evident in the manner in which we have responded to the economic crisis that continues to gather momentum across the entire economic landscape. The resources generated during the years of the (healthy) Celtic Tiger were, in substantial part, dissipated in a process of political largess. The legacy of the last 10 or 15 years can be stylised as being represented by interminable tribunals, legislation, much of which has served only to increase the burden on basic freedoms as well as on basic businesses, and regulation, which has turned to dust under the stress of recent events. These deficiencies raise the question, for example, of why it is only in an unprecedented deflationary period, we have appointed “An Bord Snip” to seek out inefficiencies in public expenditure. It is difficult to explain this either through a lack of political leadership and foresight. Equally, we have a Commission on Taxation – one that is expert and one that will produce an excellent report – side-by-side with ad hoc responses to a crisis that continues to gather momentum.

The anomalies and contradictions that riddle our taxation system have been evident for well over a decade. Neither markets, nor the lives of people, can await the production of reports. We have had too many reports. Paradoxically, the Government will commission external agencies to prepare detailed reports when all the knowledge necessary is already within their own departments. There is an acute lack of confidence in our own expertise and in our own resources.

The three budgets that have followed in rapid succession as Government failed to keep up with events, are a mess of additional levies and ad hoc taxes which result in a totally fragmented funding system. All of the time, the landmine of unfunded pension liabilities remains deep in the long grass and a clear and present threat not only to those who are employed, but even to those who have recently, or will in the near future, lose their jobs. It makes no sense to prioritise the allocation of resources, written as IOUs on our future, to financial institutions over businesses whose survival is essential not alone to individual families, but to the wider economy – and by extension to the banking system.

We have our priorities all wrong. We are spending undreamt of sums of money – which we do not have – to support utilities which are skewed in favour of shareholders (and that is the supreme irony,
since their interests have been entirely subverted by a malign business model) – while we continue to have a fragmented, unfair and multi-tiered healthcare system. That too does not make sense.

The recent Budget was seriously misconceived. What was needed was a budget written in our factories and on our farms; in our hospitals and in our homes. What we got was a malign orthodoxy that impressed no one but will do great harm.

The test of a good budget is whether or not the economic and fiscal dynamic is likely to sustain jobs, incomes and public services over the medium term; whether it will restore confidence and a sense of trust and, thirdly, whether it promotes those institutions that underpin social solidarity in the face of unprecedented social strain. The Budget fails these tests. The window of opportunity has shut and we face a period of grave economic, social and political strain and instability.

We will not get through this crisis if our political institutions and system of governance do not change radically. We should be clear that, economic stabilisation, much less recovery, will be stymied by alienation from our political system, by fragmentation of political support, and by the very real prospect of a rise in disenchantment and extremism among the tens of thousands who have joined the dole queue.

We need a realignment of politics in Ireland – we need democratic choices that mean something to contemporary society. We need a sense of right and wrong. We need a whole new political ethic premised on values-based leadership.

We need to engage individuals who have little interest in power as such, who have a commitment as well as a widely acknowledged expertise that is capable of restoring trust, confidence and a sense of direction.

Prof Ray Kinsella is attached to UCD’s Smurfit graduate business school. His book Restoring Trust in Bankingwill be published next month by Vonier Press

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