Garrett is right: we need to examine more than banking and bubbles

There are three components to the Irish financial mess. 1. The decline of the export economy. 2. The international banking nonsense. 3. The Irish government policy that created and sustained a property bubble.

In last Saturday’s Irish Times Garrett Fitzgerald argued for a public enquiry into number 1, the true death of the “Celtic Tiger”. He’s right: In the long run this is the most important issue. Employers organisations and both Garret and John Fitzgerald argue that wages at the lower end will have to compete with low wage economies. Essentially what they are saying is that Ireland must WIN a race to the bottom.

Socialists should join Garrett’s call for an enquiry as it would open a debate on different conceptions of or routes to economic development.

Hunting Vs eating: a question of entertainment

Some of those in favour of a ban on stag hunting argue that one reason for the ban is that the stag is being hunted to provide mere entertainment as opposed to being killed for meat. Last night the artificiality of this distinction struck me. I was in a restaurant and two plump, prosperous people at the next table ordered venison. Clearly they weren’t merely feeding. They were being entertained.

Appointments in Irish banking and finance

It may be that we need an inquiry into the conduct of Irish banking and its regulation. However, the complexity of banking operations should not obscure the obvious. It was clear to any person with average intelligence and a passing interest in current affairs that the property bubble would end in tears. It most certainly is not true that everyone was deceived or mistaken.

Let’s be blunt: Anyone who failed to recognise the problem is not a person to be taken seriously in future. Anyone who did recognize the problem but remained silent has questions to answer. Sensible people in the banking and finance industry must have felt intimidated by the tide of nonsense in support of the clearly unsustainable; they must have had to weigh good conduct against career prospects.

Here we have an industry in need of changes in personnel. The one fortunate outcome is that people have been tested. Some have proved themselves but it is clear that those who did not speak out clearly and strongly lack the ability, integrity or courage required to manage at any level.

A speaker’s income as political information

Some months ago I was listening to a discussion on radio. An economist was required in an atmosphere of good humour to admit that he might not be impartial, that he might have an interest, that his views might be conditioned by personal circumstances. The suspicion? Well, that was the source of the humour. He had to come clean on his relationship to Mary O’Rourke, the popular Fianna Fáil politician; he admitted to being her nephew! Perhaps this was going too far but it is generally commendable that people who take part in public discussion be open and explicit about possible determinants of their views. We consider it normal, for example, to ask a member of a TV studio audience who offers an opinion, if he or she is a member of a political party. There is however one, glaring, secretive exception.

The topic which dominates political discussion in Ireland today is incomes policy, how much people can be paid in these straitened times. This breaks down into two themes: reducing wages to competitive levels and reducing public sector pay to reflect a greatly reduced tax take.

Many of those targeted for pay cuts say that they cannot afford any further reduction in pay. Most of those talking in the media about policy enjoy salaries that are multiples of the average wage. Unlike party membership or having a political auntie, salary is kept secret or not considered a possible determinant of argument, a vested interest. There has always been a quiet and polite reluctance to divulge or discuss a person’s income, the matter being considered strictly private. The history of political communication, democratization and progress itself can be traced through issues being dragged out of the private realm into the light of politics. It is time that public debate took another intrusive step.

Consider how newspapers frequently place a person’s age in brackets or how TV identifies, describes and classifies a contributor with an informative caption under their picture. Now, consider a debate about pay in which contributors’ incomes appeared in brackets and in captions. If Josephine Bloggs, Economist with A, Professor of B, Economics Editor at C, Director of D or CEO of E, appeared to argue pay policy with her salary clearly shown, a more open, honest debate could take place.

“Middle income” and a distortion of public debate

Leaving aside mathematical quibbles, in common speech we normally associate the middle with the average or thereabouts. However, when it comes to talking about income, the use of “middle” becomes so strange that it distorts public discussion.

Someone on, say, three times an average wage cannot sensibly claim the term “middle income”. The meaningful term is “high income” or “rich”. Those on greater multiples can be described as “very rich”, “filthy rich”, “obscenely rich” etc. etc. but NOT “middle income”.

Now, some rich people lay claim to the term “middle income” because they spend their money in a praiseworthy way (e.g. school fees, their home etc.) leaving little to spend on, say, entertainment and holidays. Such spending decisions might attract the terms, “prudent”, “sensible”, “family oriented”, but they have no bearing on categorization of income.

Frontline: Is truth too complicated or too uncomfortable?

It was obvious from RTE’s Frontline programme last night that many have swallowed the popular storyline that Ireland’s boom was destroyed by developers and bankers. Ireland is indeed cursed with chancers and an incompetent ruling class but that’s one just part of the story. Ireland’s FF/PD/Green governments maintained the appearance of a thriving economy by stoking a building boom; it was criminal folly. However, the fact is that the flourishing export-led economy ended years ago as industry relocated to cheaper countries. Any fool driving around the country could see this as the factories closed and the furniture warehouses multiplied. On TV last night over and over again the simplistic view was aired: builders and bankers killed our lovely Celtic tiger!

It was sad to see on this programme too an ambulance driver making a case for maintaining his small income and in so doing protecting a group of people who were conspicuously absent: rich public servants. None of the private sector workers whose function in the programme was to attack fellow workers was prepared to have a go at poor public servants. Unfortunately, the word “rich” was never used; it seems to have been banished from our vocabulary. Instead both sides seemed to want to attack “administrators” so that “frontline” staff can be protected. It was a depressing sight: two sets of workers baying for the dismissal of poor office workers while the rich sat at home watching the spectacle.

“The Politicians”: One way that journalists limit debate in the republic

In a republic the citizens are engaged in public controversies. They rely on their mass media for the information and arguments necessary to deliberation and discussion. If the media fall short, the republic is ill served.  

 
Glib references to “the politicians” is, as Michael D. Higgins argues in the Irish Times of 22^nd August 2009, evasive but it is also poor journalism which does nothing to provoke or nourish public debate in the republic.  
 
It is long past time that some prominent journalist, editor or media manager in the state-owned or private sector media initiated an editorial guideline which would serve to limit the use of the term “the politicians” to the odd occasion on which it might have relevance. On all other occasions the citizen would be better served by language which seeks to categorise and divide politics and politicians.

Time to call the police?

Sometime last week I heard on the radio a nasty little exchange between Alan Shatter of Fine Gael and Minister Martin Mansergh. It was about Euro 200K which had been spent on turning a car park at Leinster House into a lawn. At one point in defending the spending the Minister pointed out that the original estimate of 400K had been cut in half by the use of direct labour.

Now this is interesting on two fronts. Firstly, it is very rare to hear a FF spokesperson admit to an example of a saving achieved by the use of direct labour. Ideology demands that contracts and out-sourcing be cheaper. Secondly, the saving is enormous. I accept that direct labour is more efficient but surely not by 200K on 400K! I asked the Bord of Works and received a reply to the effect that the cheaper job was the complete project.

My next step will be to ask the name of the company which quoted a price 100% more expensive than the job actually cost?

The consequences of an open economy

There really isn’t much engagement in the debate over reducing pay in Ireland. A small part of the reason is that the protagonists retreat into their terminological camps. One side uses the value-free lexicon of competitiveness and the other side emotes with reference to a “race to the bottom” in wages.

The truth is that the boom years had two parts: an internationally competitive, largely exporting part and a property boom. The former helped fuel the latter but the former ended years ago and industry has been moving to exploit cheaper labour abroad. This movement certainly is not recent.

Let’s face facts. Ireland flourished by WINNING a race to the bottom. Holding on to the jobs necessitated staying below the competition. Other than state subvention which would not be allowed under EU rules, holding on would have meant workers accepting that their income could not rise unless international competitor wages rose first or worse accepting a decrease in line with international competition.

Why good people did not defend their fellow citizens

No one who came of age in Ireland before, say, 1980 could possibly be surprised by the contents of the Report and this may be the elusive reason – sought by so many commentators – why good people in Ireland did not defend their fellow citizens.

Fintan O’Toole (Irish Times 23^rd May), in quoting a victim, gets closer to an explanation for the silence than possibly he realises, “ … regular beatings were just accepted. What you’re hearing about is the bad ones, but we accepted as normal, run of the mill … that some time in that day you would get beaten.” That describes the norm in ordinary Dublin schools and everyone knew – because children were told regularly – that much worse happened in Artane and “orphanages”. Bizarre as the words might appear at first sight, Ireland has experienced mass child abuse.

Unless encouraged, victims tend not to speak out, let alone speak up for others in a worse situation. Until very recently attempts to talk about what went on were routinely met by “time you moved on” or “got over it” and very strangely – perhaps perversely – many victims praise their attackers, and – in saying it didn’t do them any harm – express themselves content with their treatment.

Of course mass, routine child abuse was not of the same order as the crimes committed against the incarcerated children but it was sufficient to undermine solidarity and righteous anger, and to gain silence.

Discussing evil

One troubling feature of the public discussion surrounding Ireland’s Report of the Commission to Enquire into Child Abuse is a tendency to liken the Irish horror to the Holocaust. The word now properly refers to industrialised murder. The difference between Ireland and Nazi Germany is not just one of scale. They belong to different realms of evil and debate is trivialised by trying to make a connection.

Never mind the landing, who was in favour of the flight?

The Chief Economist with Ulster Bank has retired. He was interviewed this morning on Newstalk and spoke of the role of the economist in public life, emphasising the difficulty of making predictions. He pointed out that most Irish economists predicted a “soft landing” as the property boom ended. The interviewer didn’t refer to the more serious issue. The record of public figures – not just economists – should be judged not on whether they predicted a “soft landing” or a “crash” but on whether they spent years screaming warnings about the flight itself and its daft altitude.

Any sensible, prudent person could see that quite ordinary people as well as property developers and builders were being lured into reckless investment, usually financed by borrowing, by relentless public argument and propaganda carried by uncritical media. We had years of favourable comment: it was a “no-brainer”; everyone should have a “property portfolio”. Of course all those who fell for this were foolish but that doesn’t exonerate those who encouraged, capitalised on or facilitated their foolishness.

Any contributor to public debate who did not over the years see the folly or who did see it and failed to speak out time and again, and those in the media who failed to find and give a platform to sensible contributors should never again be taken seriously.

Reducing the Public Pay Bill

The Irish government wants to reduce the public pay bill by 10%, about 20Bn. Discussion about how this might be done has been limited to familiar themes. The only nod to decency has been mention of leaving the salaries of poor public workers untouched but even this has been challenged as “unfair” to poor people employed by private companies. In these strange economic times why not indulge in the luxury of radical thought?

 

If we open discussion to hitherto unthinkable possibilities, it might lead us to reconsider our values. There may be a progressive but challenging way to reduce the public pay bill. Let’s consider putting a ceiling on the income of rich public employees. This course has advantages beyond reducing the total pay bill. It makes a statement about and begins to address excessive inequality in Ireland but it will make no one poor. Moreover, the conventional argument for outlandish pay, that high earners will defect to jobs in the private sector, no longer applies. Let’s calculate. How much would be saved if no public worker received in excess of, say, E200k per annum? Perhaps the number of workers that well paid is too small to make a significant saving. Let’s then calculate for 150 and 100. Going any lower might begin to push into the terrain of radical egalitarianism but 100k is more than twice the average industrial wage and five times the minimum wage.

 

Responding to attack

In most situations we should resist simplification but occasionally a moral question is simple.

 

Should a maniac take over the house opposite me and begin shooting at my house, even killing a member of my family, desperate though my situation would be, state forces could not destroy the house opposite until the family living there had left. Failing that, they would have to find a way of shooting or capturing the gunman. Until then I would have to endure.

 

Hamas murderers, using civilians as a shield, fired rockets into Israel. Israel cannot respond with shells, bombs and missiles.

The “Fás scandal” is not unique but an example of how many senior employees think they are entitled to behave.

Only the wilfully blind could think that there is something unique or even unusual in Fás employees confusing business and pleasure. The revelations from Fás illustrate the extent to which an idle “executive” culture with its roots in private business has lodged in the public service. Public servants are expected to behave better but those who see themselves as equivalent to people at a similar level in private industry have abandoned the service ethos and joined in a way of life which measures status and success in access to unearned consumption. This is not to say that that this form of white-collar theft from private companies is acceptable but merely to say that it started there.

Business Class

The term “business class” in travel is revealing. Airlines realised that two conditions existed which would allow them to make money on this new notion of travel class. For the purpose of successful marketing the two conditions had to be in numerical harmony. Firstly, a sufficient number of travellers had the means to plunder their employers’ funds to pay for unnecessary luxury. Secondly, the number of such travellers was small enough to form the elite identity that the status hungry crave.

Balance is just one of a number of values in broadcast debate

There is a report by Fiona Gartland in the Irish Times of Oct. 24^th  that the Oireachtas Joint Committee on the Constitution intend to reconsider the question of balance in broadcast coverage of referendum debates. It is long past time that the privileged status of this communication value was questioned.

 

It is certainly not the case that balance is without merit but its limitations and the risk of exalting it above other values has become apparent.

 

When there is a clear choice between two courses of action and where there are sensible arguments on both sides, balance is a treasure. Unfortunately this is seldom the case and balance – crudely understood – becomes a problem.

 

Very often there are many points of view. Balance implies just two.

 

Crude attempts to quantify balance by – for example – linking it to the number of TDs supporting an argument makes sense only if one believes that broadcast debate should reflect the existing consensus in society or the most widely held views. Balance can be evaluated quite differently if one believes that broadcast debate should serve the engaged citizen, someone who wants a lively challenge. In this view balance might be between the majority view and a minority view, between opposites, between antagonistic views or between consensus and innovation.

 

Coverage of the Lisbon Treaty debate showed how balance could be the enemy of truth. Nonsense was repeated day after day to create balance and newsworthy conflict.

 

Balance is important and worth defending as part of a parcel of communication values which should include at least truth and the promotion of challenging viewpoints.

 

 

When you’ve finished playing bullshit bingo, tell the change manager that the game is up.

We need to begin to take seriously the pernicious effect of jargon, guff and blather on our lives. It’s certainly not new; Orwell’s “Newspeak” and Marcuse’s observations that “free” had come to mean “market” and that “intellectual” and “bureaucrat” had become terms of abuse spring to mind. Now that I think about it, Alice in Wonderland springs to mind too! There is of course a wickedly funny side to it. The, let’s call them, “goingforwardeers” and “drilldowners” provide hours of amusement. Recently a PR representative for Bus Eireann told a radio interviewer of plans to “roll out” new buses. Interestingly, the interviewer didn’t laugh.

The sheer scale of the balderdash, the confidence of its users, the lack of media criticism and the rise of a highly paid and unproductive elite suggest that perhaps something rather serious has happened.

It is of course a problem for public discourse when participants will not or cannot speak plainly. In most cases nothing very remarkable is being said; the jargon merely masks a vacuous lack of originality. What is remarkable is the lack of a challenging voice and the failure of media to clarify. It is worrying to think that there is a protective consensus around nonsense.

Anyone troubled by this consensus would be wide of the mark to blame capitalists or business. In trying to identify who gains, look not to the super rich but to a new elite who master the language of obscurity. These are the composers of mission statements, the change managers, the authors of impenetrable reports and pointless restructuring. They are many, they are relatively wealthy, they exhibit an extraordinary degree of solidarity and they are not subjected to public scrutiny. They are a nuisance – possibly, a menace – in that they smother innovation, creativity, and argument. A fake progressive and fake business lexicon is used to mask a layer of drones.

By all means let’s have fun with this. Let’s make the utterance of “key performance indicator” a capital offence! Let’s call for the closure of the Podge and Rodge School of Management! But, let us also begin to end this nonsense. Sooner rather than later searing clarity will be needed in government, business and the public sphere.

Character, Culture and Working Class

Richard Reeves, “A Question of Character” in the August edition of  Prospect (http://www.prospect-magazine.co.uk/article_details.php?id=10283) might prompt socialists to revisit roots and work upwards towards a more credible and appealing view of culture.

There are at least two failings among socialists. Firstly, the term, “working class”, has been allowed to become meaningless or a synonym for very poor. To be working class was to claim status and pride, e.g. until relatively recently “a working class illiterate” would have been considered an oxymoron.

Secondly, socialists – in defence of the poor and oppressed – have been drawn to an uncharacteristically liberal view on equality. The high ground of positive liberty has tended to be abandoned in favour of a negative liberty – or even extreme relativism – that tries to cherish everything. It needs to be emphasised that there is not the slightest contradiction between wanting to liberate people from poverty – economic and, yes, cultural – and taking care not to blame them for being poor.

Consumers and naive belief in competition: An economics lesson from Aer Lingus

 

It may be plain to see but it is seldom said: Competition can prompt price increases. The Aer Lingus price increase for credit card bookings is a useful lesson for anyone naïve enough to believe that competition always operates in the consumers’ interest.

“An Aer Lingus spokeswoman told The Irish Times the latest increase had been implemented ‘to bring the airline into line with its competitors’. Its main competition is Ryanair, which charges handling fees of €5 per flight segment for credit card bookings.” (I.T. 22nd August)