‘progressive’ is a word that I hate to see used these days. It’s meaningless. On the face of it I understand it to mean someone who is generally pointing in a positive direction without trying to get into how the ‘progressive’ individual stands on knotty issues. So we don’t know what ideology they espouse or if they think capitalism is a good thing, on the whole or not. It’s easier to contrast them to a ‘regressive’, who is characterised as someone who wants to gets kids from poor families into the workplace sooner, probably as chimney sweeps, although they’ll settle for interns (although joking aisde Jobsbridge probably has a chimney sweep internship program) and are willing to force people on modest incomes to sell their internal organs before going into hospital to cover medical expenses.
Anyway I have heard Michael O’Sullivan described as ‘progressive’, so I presume I’m expected to be grateful to him for fighting the good fight, and pointing out the blindinly obvious on Prime Time when going head-to-head with Dan O’Brien or some other poster child regressive.
I mention Michael O’Sullivan because he has an article in the latest edition of (spits) The Dublin Review of Books. The reason why the Dublin Review of Books tries to emulate the name of the London Review of Books, it seems, is to get some of that middle class cache the LRB has with an Irish book-reading, university educated audience, although being co-edited by someone from the Irish Times means its actually more conservative. The LRB after all publishes Zizek! Perry Anderson!! Tariq Ali!!! and lots of other continental philosophy, end-of-ideology snot-bags. But the DRB publishes Michael O’Sullivan.
I don’t recommend it. In fact its worse than I originally thought - because I skipped to the middle rather than reading the whole thing from the beginning. It’s a bad habit but as a result I came across a point I almost agreed with:
“It is not hard to see how Irish people’s previously positive view of the EU could change. But the apparently widespread notion that our vast national debt exists because of a desire by the EU to protect French and German banks is a delusion.
Ireland, its banks, property oligarchs and policy-makers are culpable of creating an asset price bubble that rivalled the Japanese property boom of the 1980s and the Mississippi Scheme and South Sea bubbles of 1720. Our remedy in the aftermath of this bubble was to ensnare the state in the debt of Irish banks and then to wander aimlessly into the arms of the EU bailout package.”
Well, the EU is in effect protecting French and German banks. The EU know that banks will resist recapitalisation because to accept it will require them to completely open their books. The reaction so far from the banks to the idea of recapitalisation is that it would rather sell assets and reduce lending then be recapitalised. But its not the full story and so his second point is worth emphasising.
Noonan apparently quiped that he was thinking of having T-Shirts printed with the phrase ‘Ireland is not Greece’. This was supposed to plant the idea that Ireland is in a much better position. Greece’s problems we are told are due to government overspending, clientism, getting Goldman Sachs to refinance infrastructure loans and so on. So it was due to investing in infrastructure, creating jobs and increasing wages in the public sector while at the same time doing absolutely nothing about taxation.
Ireland’s debt on the other hand is due to ‘banks, property oligarchs and policy-makers’ creating a speculative asset price bubble which when it burst left the banks and property magnates with huge debts. The reason we have large a national debt now is because this was made into a state liability.
So yeah, Ireland is not Greece.
But then Michael O’Sullivan says:
“Complacency, greed and bad policy-making are the root causes of our plight and that needs to be faced up to.”
Dreadful, dreadful stuff. But it worse when I looked at the bits I’d skipped:
The easy success of the “good times” meant that policy-making lacked real stimulus and rigour, at least from the political level. Economic policy went no deeper than “if I have it I will spend it” while our foreign policy has not extended itself beyond a reverence for institutions like the EU and an adherence to the limp analytical framework of “Boston or Berlin”. Strategy has consistently been our weak point and as a result our independence has been damaged. This shortcoming is systemic, and can be seen in sectors other than banking, such as hospital management or the relationship between Church and state.
There are two strands to our lack of preparedness. One is a simple lack of quality in institutions and a near total absence of strategic thinking among politicians. The other is a blind willingness to accept the gifts of outsiders as a means of supporting our economy, with little thought as to the consequences of this policy. Two examples stand out. One is the very successful attraction of mainly US multinationals to Ireland, a side effect of which has been to leave policymakers and capital providers with a blind spot as to the importance of a strong domestic services/industry base. The other has been the ready adoption of the constraints required by the euro-zone, with very little accompanying organisation to deal with the imbalances likely to be produced. In other spheres similar cognitive errors appear. Successive foreign ministers, for example, have declared that the UN is the cornerstone of Irish foreign policy, an intellectual cut and paste that has saved them the trouble of crafting a distinctive independent policy themselves.
Accepting the wisdom and apparent benevolence of others may help us in the short term but it limits our independence and sustains intellectual laziness. This passivity may stem from our long colonial past, and perhaps also from the fact that the state grew up during a period (the 1930s to the 1970s) when the world economy was more closed than open. The authoritative account of Ireland up to and beyond this period remains Joe Lee’s Ireland 1912-1985: Politics and Society. In its 630 pages, one quote that stands out is ” … small states must rely heavily on the quality of their strategic thinking to counter their vulnerability to international influence”. Written at the end of the 1980s, this would seem more likely to have been intended as an admonishment than praise of Ireland. Against this backdrop, the growth of the economy from the 1990s onwards might offer some rebuttal of Lee’s view. Even today, in spite of the fog of our debt war, it is possible to find things that “we did right”.
“Intellectual laziness” - He got that right.
However, this was the section that first caught my attention:
“The second weakness facing our economy and something of a long standing puzzle is the troubling mystery of capital misallocation in Ireland. While Irish savers have traditionally been reluctant to provide capital to Irish entrepreneurs they have been willing to risk everything they have (and more) on a speculative asset price bubble. In addition, it is also puzzling that some consumer prices have remained stubbornly high during our recession. Proponents of Ireland’s “economic miracle” point to the relatively high levels of private research and development expenditure in the Irish economy, but the reality is that much of this capital comes from abroad through multinationals. Historically, Irish savers have not been generous providers of seed capital to Irish companies, nor have they been a willing source of secondary capital for research and development. Where they have invested, it has not been well diversified and, though this is a generalisation, has also been speculative. Much of this misdirection of capital has resulted from the poor quality of retail, private and investment banking in Ireland.”
Longstanding puzzle? Well it’s a fierce pancake altogether, to quote the Third Policeman.
The economist and Marxist Michael Perelman has an excellent paper up on his site at the moment. It’s about power and how economists, those who are not Marxist that is, ignore power:
“Part of the training of economists is the development of an instinct to avoid any consideration of power, other than presumptive abuses of government, which interfere with the functioning of markets. In conventional economics, power is reduced to a metaphor. We have the power of the market or the power of competition, but corporate power is nowhere to be found.”
Which goes someway to explain why Michael O’Sullivan is incapable of discussing power dynamics.
Now if only someone would write about how power works in Ireland…