Tuesday, November 15, 2011

In Defence of Cronyism

There are few democracies in the world that do not have mechanisms to allow political patronage, to facilitate the bestowing of honours, rank, privilege or largesse in some capacity as a reward for service to a politician or a party once it has been successful in an election. From the humble councillor, seeing fit to award a small project to extend the town hall meeting rooms to his erstwhile part-time campaign manager, full-time contractor; to the worst excesses of high stakes lobbying in the US, it appears to pervade modern democracy.

In the first instance, we have to acknowledge that as democrats - or, to put it more accurately, as supporters of representative democracy - we have decided as free people to place power in the hands of a relatively small number of people at local, regional, and national level. As the jurisdiction increases, so too do the powers. There are big decisions to be made involving large interests, and someone needs to make those decisions. The idea, of course, is that we judge in the first instance in whom we should place our trust to make such decisions; and after a series of decisions has been made, we judge once more whether we retain our trust in our representative.

Giving them that power means that we also concede to them peripheral powers to enrich and potentially impoverish at the stroke of a pen. At this juncture we call for transparency in decision-making; impartiality in judgement; and an attitude that is above reproach. We also implicitly accept that the people who we appoint in our elections will govern and manage our affairs in a particular way, with a particular ethos. Who better to appoint to the quangos of government then than their supporters, their team, even their families! They are all more likely to agree with the politique du jour, and therefore more accurately reflect the will of the people in the administration of state! Should these appointments be flung open to the great masses, then even supporters of the ancien régime could apply, and that would be unacceptable in our democracy!

Granted not all democracies - including our own - make it easy to change previously appointed members of state boards and other quangos once there has been political re-capitation, and this is perhaps something that should be addressed. Political appointments reflect the political will of the day; once that changes, then the legitimacy of the appointment similarly subsides. Nevertheless, we must trust our political rulers, and our political system. If we do not trust our rulers, especially after they have just been elected, then we do not by implication trust our political system. And if we do not collectively trust our political system, then the revolution won't be long in coming.

Monday, November 07, 2011

An Economic Police State

Negri and Hardt's Empire and subsequent Multitude discuss the status of the police in modern democracy, and their role in enforcing a supposedly illegitimate will. In order to have this level of enforcement accepted by the people, it is necessary to build fear in the populace, and a consensus that the state is required to defend the majority. The argument was that in a post-9/11 world (though Empire was released just prior to the September 11th attacks), state's could ratchet up the fear, increase the level of imposition, maximise curbs on freedom (in the public interest) and exert controls over media and other propaganda weapons. Spooky stuff, and in America we had the Patriot act, in airports we had our nether regions fondled, and in law we saw our rights being eroded while civil libertarians were denounced as kooks or anti-Americans. The world was indeed becoming a scarier place. We now had threats of weapons of mass destruction, dirty bombs, global terror networks and rogue states that could destroy us all. We didn't quite have Joe McCarthy warning us of a terror within - thank goodness for small mercies - but the fear was now palpable.

The economic events of the last several years have served to layer another scoop of fear on top of that orchestrated by the late Osama bin Laden. Now, we are being told that in order for our economies to survive, in order to protect our economic sovereignty, in order to protect the currency (and by extension our prosperity) we must once more submit: we must submit to austerity (if you're Greek, Irish, or Portuguese); we must submit to a kind of neo-socialism (if you're German); we must submit to Brussels, and neo-Federalism (take note, Turkey!). There is resistance, but the European organisation moves on.

Personally, I'm getting a little fed up with all this fear. If the Iranians want to bomb the village Inch, where I live, let them try. If the Germans want to come and take my house in return for the debts of others in Ireland, let them try. The reality of course is that Ahmadinejad has no more interest in bombing Inch than Angela Merkel has in repossessing my house. The threats are hollow. But the system responds in a way that is self serving. Those operating the system, or more accurately within the system, have no alternative. There is no plan B.

Friday, November 04, 2011

We have reached the point of perpetual economic crisis

Today’s G20 non-event in Cannes showed just how impotent the global political leadership is – China included – in fixing the European debt crisis. That Europe and the US are not engulfed in this mess as directly as Eurozone members is in part due to their independence from a currency perspective; and in part due to their swashbuckling (some would call it reckless) approach to dealing with the crisis through quantitative easing. The problem is the same for all western developed capitalist liberal democracies. They are all leveraged to the hilt.

At the end of the day, it comes down to resource distribution – raw materials, be that oil gold, copper, or other commodities. If you have those resources in sufficient supply, then you have a fundamental wealth that can support the economy. Labour as a resource long disappeared as a significant asset because it cost so much. Knowledge as a resource – intellectual property, patents, researchers, education – has not managed to fill the gap that Globalisation has created.

Since the end of the Second World War, financial instruments and derivatives of increasing complexity have evolved to take advantage of an increasingly interconnected economic environment all over the world. Governments have taken advantage of this to maintain growth, and therein prosperity, peace, and most importantly of all – power. Power is its own master. It protects itself, it serves itself. And those who seek it always serve it. When their usefulness to the prosperity of power is expended, they are cast aside.

Governments and societies first cultivated domestic economies through resource balancing in globally competitive environments. They were able to subsidise one industry where labour rates were uncompetitive with another where oversupply was commonplace – like mineral production or farming. Ultimately, however, this was unlikely to persist. Growing populations meant that farming was unlikely in the long run to provide oversupply and that food derivatives could continue to be exported profitably and competitively. Minerals and other natural resources ultimately run out. The knowledge economy, a phrase coined by Peter Drucker in 1992, became the panacea to cure those ills.

Wealth, and resource, is a zero sum game. There is only so much of it to go around. We cannot manufacture wealth from thin air. This, however, was what economists and economic engineers were able to do. They did this in a number of ways. First, they mortgaged the future, borrowing against future income, predicating their maths on future growth, and accepting effective slower increases in general wealth in return for a less volatile path. The basic presumption was that growth would inevitably continue in the long run, and if that was somehow compromised by events such as war, severe depression, or some other globally impacting event, then the “long run” would simply become longer. For the last 100 years, equities and all other financial instruments have performed positively – so long as you take a long enough view.

Armed with these financial instruments, successive governments increasingly leveraged their states. Some time in the early 2000’s, western liberal democracies reached their peak. They could be leveraged no more. The “long run” became finite. They were dependent on perpetual uninterrupted growth at the risk of significant crisis and default. When the subprime property crash hit the market in the US in 2008, the global financial system shuddered.

Quickly, the US began printing money. That effectively began to devalue US wealth in a global context, but allowed the illusion of domestic prosperity. Imported goods began to grow more and more expensive, but a reasonably broad domestic industrial base allowed native foodstuffs and other goods to supply domestic demand. Gas prices have kept on rising, which is the one real element of the US economy that it has less control of. Many would argue that this is at the heart of their middle eastern policy. Lehman brothers imploded as its exposure to the domestic economy – and in particular to the property market – was too great.

In the UK the effects were felt pretty immediately. The Eurozone economies began taking on water also as banks that were exposed to overpriced domestic property began to fail in Iceland (not in the Eurozone, but openly integrated with UK and Eurozone investments), then Ireland, then Greece. Sovereign credit was denied these countries as they scrambled to make some coherent structure of their sovereign accounts. It was an almost impossible task. On the one hand, fundamentally underperforming economies were structured (particularly in the public sector) to support much more prosperous ones, requiring painful readjustment. On the other, these economies were suddenly aware of massive debts that would have been eyewatering in the good times, if anyone had cared to look. With massively reduced growth prospects, and readjusted economy sizes in absolute terms, the debts are simply unsustainable on an individual country level.

All current efforts are geared towards stabilizing the ship. The volatility in the markets is bad for business, bad for growth. Getting back to manageable debt burdens and reasonably balanced national budgets is good, right? Well, no. That, essentially, brings us all back to 2007, still leveraged to the max, and waiting for a single shock to the system that will send us all reeling again. The efforts today will not build into the system any real change, as the political leadership doesn’t have the capacity or the will to effect that change. The cycles are too short; the impacts are too wide ranging and long term to be of consequence.

The debt, of course, is real. The wealth belongs to someone. That’s China, it’s the Middle East, it’s other resource rich countries. They have an interest in seeking adjustment, because business ceases entirely unless a reasonable structure can be found for overburdened sovereigns. But they have no interest in restructuring the entirety of the international credit system. That would – essentially – undermine the basis for their current wealth, and involve some kind of global redistribution of debt. And even then, there is no real answer to what system replaces it.

And so we find ourselves in perpetual crisis. Any need to increase leverage will be met with consternation by the markets. Any failure to deliver on basic growth numbers will be similarly frowned upon. Any “boom” will be characterized by transience and caution; any bust will be dramatic and painful.

Perpetual crisis will be socially unsustainable; but, folks, at least the air is free J

Monday, October 24, 2011

An Ordinary Man: Why Fine Gael Voters are Voting for Seán Gallagher

Today's IPSOS/MRBI poll for the Irish Times confirms other polls from the weekend. Sean Gallagher's lead is significant. What is perhaps more interesting is the voter distribution. More Fine Gael candidates are voting for Sean Gallagher than for Gay Mitchell. This is by no means due to the party's dislike for their man - though some would have preferred Mairead McGuinness or Pat Cox, and Mitchell has some difficulty beyond the Pale. It is instead due to a vapid core in centrist politics in Ireland, a reactionary rather than ideological imperative, a case of following to where power is likely to be rather than achieving legitimate power through genuine leadership.

In many respects this is not unique to Ireland. American politics is defined by high rhetoric and vague promises, where the candidate's desperate search for substance characterises each election. Notwithstanding her own absence of real ideas, Sarah Palin's coruscating critique on the Obama administration "How's that hopey-changey stuff workin' out for ya?" summed up American politics very well. India, the world's largest democracy, has effectively disenfranchised its educated elite, as they represent such a minority. Whether this is a threat to democracy there remains to be seen - and perhaps, though this is not the subject of this article, it explains why the influence of corporations and private industry is increasing both in Indian and other democracies.

Jim Hacker of Yes Minister once said of his electors "...I am their leader; I must follow them." In essence, this characterises where Irish politics has come. Fianna Fáil in particular were the first to deny legitimate policy discussion and debate, and moved instead to soundbyte politics, handshaking and baby-kissing en route to inoffensive election victories during the Celtic Tiger era. There were no substantive discussions, and when there were, no one was listening.

People simply didn't care about politics, but - crucially - they did care about identity. People cared about who they were, and, by extension, who represented them. People cared, and do care, about people who are "like me". Sean Gallagher doesn't quite have the polish of a Gay Mitchell, or even a Martin McGuinness. Whatever you think of their politics, Mitchell is a career politician in a perfect suit, and McGuinness is a slightly scary career military general. Neither of those guys are "like me". Michael D Higgins is an intellectual, an artist, and a visionary - again, he's not "like me". Seán Gallagher's a decent skin, who's got some sort of education, with some modestly successful business ventures, and a tie that doesn't always fit right. And just "like me" he's not quite perfect. Just as "we" are a little fat, a little short, a little ugly, a little dim, he is a little blind. He's patently not perfect. And that, for "me", *is* perfect. Bertie Ahern fit that mold as well, the slightly dodgy former Taoiseach. As Eddie Hobbs put it once, we Irish 'like our politicians just a little bit bent.'

The problem for Fianna Fáil was that once the tide went out in terms of the economy, there was no ideological anchor to hold its vote. In essence, if the contest becomes one of personality, populism, and likeability, then in bad times people will turn to any other option that seems credible, presuming that the incumbent "lot" caused the problem. Fine Gael, in order to seize power, turned itself into a copy of Fianna Fáil in order to be seen as that credible alternative, then waited for the crash. The election in 2007 came about six to twelve months too early. Had the pain of the imminent recession taken hold, Fine Gael would likely have taken power at that stage - as it happened, they came very close - within a half dozen seats or so - of taking power with Labour.

Speaking of Labour, let's think about them for a minute. When the economy did well, they did OK. When the economy did badly, they did OK. Very little deviation. Their vote has improved this time, but they are still not achieving anywhere near the levels needed for a significant breakthrough. On the other hand, they are less likely to suffer a dramatic fall in support should things not work out. This is because Labour have more of an ideological anchor that can hold their vote. Noel Whelan has argued that there is no such thing as a "core Fianna Fáil vote", this atavistic group of people who would vote for Beelzebub himself were he in Fianna Fáil. I agree. But Labour, on the other hand, have an ideological core that is more difficult for certain people to move away from. Whether this means, more generally, that people are less idealistic, or ideologically driven, I don't know. They are certainly less ideological than political parties and their activists, and certainly less than political journalists and columnists, who tend to analyse based on substance and policy rather than genuine politics.

So parties who are successful create for themselves an image of populism, of "we're just like you", and succeed or fail on that basis. Fine Gael voters are not, really, Fine Gael voters, but rather they are voters who voted Fine Gael in the last election or would be likely to vote Fine Gael were there a general election tomorrow. They don't belong to Fine Gael in that way. In this straight fight between seven personalities, Gallagher better represents the man on the street: the ordinary, the worker, the grafter, and the slightly imperfect. Gay Mitchell is too perfect; Michael D is too smart; and Martin McGuinness is too, well, foreign (in a non-nationalist way, he just seems to be from somewhere else...up there, I suppose you'd call it; one suspects he will poll much better the further north you go, not just because they can relate better to him in terms of the Peace Process, but because they can better relate to him culturally - he seems more normal up there).

In the words of Christy Moore, Sean Gallagher is "...an ordinary man, nothing special, nothing grand; he's had to work for everything he owns." And that's why he'll win.

Sunday, October 23, 2011

President Gallagher: What it Means for the Other Parties

I'm in Sydney fighting jetlag, and it seemed like something of a bad dream when I stepped off the plane to read my wife's response to the obligatory "Landed! All Well! Plane Didn't Crash" text message. "Great," she texted. "Gallagher on 40% tomorrow." Well if the twenty degree heat at six in the morning didn't blow me down, then that one certainly did. We all didn't expect this now, did we.

So everyone who is "well read," "politically savvy," Phoenix reading, #vinb watching and into, like, their current affairs is now scratching their heads, and glancing awkwardly around as if looking for a back door somewhere. Well, there's no back door, and we were wrong. The 39% in RedC last week was no blip; the forensic stories about business mistakes had no effect; revelations about the Fianna Fáil past either sailed right over the heads of the electorate, or simply didn't matter. Now of course, there are many days to polling day, and it could turn around, but...well...I just can't see it. I concede to His Excellency, President of Ireland, Uachtaráin na hÉireann, Seán Gallagher.

In all fairness, he seems like a likeable enough chap. He did try to put a ridiculously good spin on what has been at best an average business career, but that's showbiz, right? And for all his dealings with membership of Fianna Fáil and all that, at least Dermot Ahern doesn't like him. And anyone that gets up Dermot Ahern's nose that much can't have too much wrong with him in my book.

For Fine Gael and Enda Kenny, it's abject disaster. Six months ago, the Presidency must have looked like an open goal. But between his meddling with the Pat Cox candidacy, and his animosity towards Mitchell, he's royally screwed this up. It won't finish him by any stretch of the imagination. It's only the Presidency, after all; and the Shinners didn't get in. But the honeymoon, as they say, is most definitely over, and he is in a vulnerable position entering a period of savage negotiating over what will be an excruciatingly difficult budget. The polls keep FG buoyant too, with the Sunday Times indicating that the Presidential numbers are nowhere near aligned with party numbers. FF are static, FG remain in the high thirties, and all is still right with the world. Presuming Kenny navigates the budget in December, the early months of 2012, when people start to feel the pinch of those cuts, may see popularity for the government diminish, and with it the popularity of Fine Gael. Should that happen, Kenny will do well to see out the year. Watch Phil Hogan's eyebrows, that's going to be the cue.

The Labour party will be sorely disappointed, as much ideologically as politically. Michael D is a great candidate, who has served his time, and is extremely popular. They'll all be personally disappointed for him. He could have done no more. It may be that this is the moment that Labour realise that they need to be far slicker in their marketing, far more aggressive in their fundraising, and that the end, ultimately, will justify the means if they are to some day gain power (corporate donations, hello?!). The alternative is to resign themselves to minority input into centrist-populist government every other coalition for the foreseeable future, because - to borrow a phrase from a previous election - there aren't enough people who *think* Labour, never mind *vote* Labour.

Fianna Fáil have seen no bounce in the polls with Gallagher's success, but he's showing them the way. They are all re-energised about their future, convinced that there is redemption for the party, that the brand is not actually that toxic - it was just the government and the people that were in it last time round were bad (awkward pause here as the pols look around at Micheal Martin, though at least he resigned, though it was really, really late in the day..). Not only that, but Sean Gallagher has proved that they can do it without becoming soppy bleeding heart neo-socialists (no, really, they mean it this time). They just have to give a message of positivity. Or something like that. And shave their heads (Brian Crowley in particular won't like that one!).

For David Norris - adieu, adieu, parting is such sweet sorrow! Mary Davis - early promise, faded soon, never showed. Dana - God Bless! And finally, to Martin McGuinness. I think it was an interesting experiment for Sinn Féin. Riding relatively high in the polls, with a strong, dynamic, recognised candidate, they were able to force a debate on the IRA and its past, and the willingness of "us down here" to move on. It was something of a broken record, I'm afraid. But the door to power across the island for Sinn Féin is a little more ajar than it had been six weeks ago, and they'll be pleased with that. They'd have liked 20%, I have no doubt, and - who knows - perhaps they'll get it.

A final thought - Sean Gallagher spent much of his life involved in politics, and from a very young age he built for himself the structures of a political career. He seems now to have managed - extraordinarily - to break from the party system within which he had built that edifice, and succeeded in winning the presidency. As Fianna Fáil rebuild themselves, buoyed by this proxy win, and as over the next few years Gallagher realises how impotent the Presidency really is (and a Fine Gael Taoiseach will make him realise that all the more), could he be tempted back to become the centerpiece (finance, perhaps) of a Fianna Fáil General Election Campaign in 2018 or 2019? Probably not. But stranger things have happened!

Tuesday, October 11, 2011

Gay Mitchell and the Problem for Fine Gael

It's early days in the campaign, but Gay Mitchell is not polling well. As the field solidified, the FG vote deserted Mitchell. It did so for a number of reasons: a botched negative attack on Martin McGuinness, perceived initially as the main threat, particularly in winning old Fianna Fail votes; the absence of Fianna Fáil; the strength and diversity of the other candidates; and also the sheer number of other candidates, and the unlikelihood of a government candidate attracting significant transfers.

The negative campaign was a disaster. Mitchell's intemperate appearance with Eamon Dunphy and McGuinness, coupled with the Late Late Show (and an appalling attempt to do a Lloyd Bentsen on McGuinness, who is certainly no Dan Quayle!) did not serve him well. Countless studies show that negative campaigns work. One study makes the point that "[b]ecause negative political advertising that identifies the sponsor and the target hurts both candidates, when a candidate uses such advertising, it would be better not to identify the sponsor." Having the sponsor actually execute the campaign, and deliver the messages personally is completely counter productive. The attacks didn't help McGuinness, but they certainly hurt Mitchell.

Another problem for Mitchell has been the absence of Fianna Fáil. Whatever one says about Seán Gallagher's Fianna Fail credentials, there is simply no imperative to "get those b£$%ards out!" as there was back in January. The persistence of high FG polling since the general election dilutes this notion somewhat, but that FG was a significant, feasible alternative to Fianna Fáil in the election in February is simply not an issue in this campaign.

The opposing candidate quality is also very high. Gallagher, presenting an independent, non-negative, blue sky kind of view is very slick and effective. His response to Fianna Fáil associations that "I never hid that, I encourage political participation, I am an independent" is effective also. McGuinness has great recognition, a grandfatherly way about him, and a seriousness that is difficult to match - you get the sense that people would listen to him when he says something (no jokes please!). No-one can truly say they don't like Michael D, and even Dana has a niche that, in her absence, Mitchell could have expected support from. David Norris one feels is damaged now, and Joycean foppishness is beginning to look like a playful gimmick, in the midst of very serious discussions by the other candidates. Mary Davis is gathering a significant woman's vote. All of that conspires against McGuinness, and the absence of a Labour candidate to be eliminated before him means that transfers will be all over the place.

If Mitchell loses, Fine Gael will find themselves under pressure. If they lose to McGuinness or Gallagher, it will be a boost for Sinn Fein who are already flying high, or perhaps the beginning of a resurgence for Fianna Fáil. If they lose to Higgins, Gilmore may become more active within the coalition, agitating for more Labour orientation to policy given their now enhanced mandate. Kenny will come under pressure for his dithering over Cox, and with county council elections the next hurdle, grassroots whispering about the Taoiseach may begin anew.

Fine Gael now need to find their new vision. For good or ill, it was defined by Fianna Fáil in the election in February. They need to be seen to make significant speeches on social policy, foreign policy, and other non-economic subjects. They need to broaden their definition of themselves as more than merely a party of business, an economic hope. They need to become more representative of Irish aspiration, not merely administration. Otherwise, they will fade into the dross and cynicism that has so characterised the Irish political class for a number of decades now, illuminated only too briefly by the Green Party.

It is a tremendous opportunity for Fine Gael to tighten their grip on power in this country for a generation. I doubt they'll take it.

Saturday, October 08, 2011

Why Sean Gallagher's Fianna Fáil Past Matters

The relationship between Sean Gallagher and the Fianna Fáil party is becoming more of an issue as he becomes a serious contender. Whether it is manufactured or substantive I'll deal with later.

In January this year Gallagher resigned from the National Executive in a letter later published on politics.ie. In the same month, he helped launch at least two election campaigns of Fianna Fáil candidate, including front bencher Dara Calleary. He claimed for some time that he left in 2009, but whether he was officially a member or not (whatever that means), he was clearly continuing to support the party until just before the General Election this year. In fact he officially resigned as per the letter from the National Executive in January 2011. In that letter, he makes no reference to his membership of the party (as distinct from the national executive). He does however express his "continued support" to Sean Dorgan and his colleagues. He has openly told of working on Seamus Kirk's re-election campaign, and in Rory O'Hanlon's office, though he is not clear on when those roles ended, and the 1990's in particular seems light on detail. In 2006 he gave a gift of an iPod to then Taoiseach Bertie Ahern. As of today, Gallagher's representatives were denying he had anything to do with Fianna Fáil after 2009.

At best, Gallagher is being evasive on the question of the depth and recency of his relationship with Fianna Fáil, and, if he did indeed resign his membership of the party, why he did so. In one interview with Pat Kenny, he stated “I can’t be any more specific than I’m being. I’m standing as an independent candidate and I’m putting myself forward in that capacity. I’m not a member of any political party.” He is most likely at this point not affiliated with Fianna Fáil, he will have made sure of that. But the answers he is giving are Jesuitical - a phrase famously used by John Gormley to describe answers secured from their coalition partners Fianna Fáil on the occasion of the IMF bailout.

Membership of a political party in Ireland is at best a nebulous thing. What seems not to be in dispute is that Gallagher joined Fianna Fáil as a young man in the 1908s. It is unlikely that he ever formally resigned from the party; if people become effective non-members, it is through lapsing. And - taking Gallagher at his word - we can accept that he lapsed for significant periods over the past thirty years. It is also reasonable to assume that he has never been associated with any other political party in that time.

As Gallagher's profile rose with the Dragon's Den series, it was clear that it could provide him a platform for election to public office. Clearly also he is a man with personal ambition. Looking at the landscape in late 2009, the tide was turning. In November 2009, a RedC poll put Fine Gael at 36%, and Fianna Fail at 23%. If Gallagher at that time had designs on a Dáil seat, or the Presidency, the Fianna Fail ticket would possibly become more of a hindrance than a support.

However the thought process progressed from there, we can only speculate. But here's why his obfuscation is a problem for voters.

1) He appears to be misleading people about his history with the Fianna Fáil party. He says he left in 2009, while he was clearly providing public, active support in this year's general election.

2) His association with the party, while co-running a business with tight connections to the property industry, smells of that golden circle of Fianna Fail, Banks, and Property Developers. While Gallagher's company was a subcontractor, it was clearly likely to be well served by Gallagher's political connections. This is a point Gallagher has not addressed.

3) Gallagher, in distancing himself from Fianna Fail, appears to have done so exclusively for political gain. This is perhaps the most damaging aspect of his candidacy. His expressed continued support for the party seems in hindsight an attempt to retain whatever support he could from the party, its structure, and its network, while shedding the clearly toxic badge. It was, in effect, a power play. There was no valour in it, no idealism, no vision. It betrays a man who does not have strong principles, and who would be an apologist for Fianna Fáil.

Had he left the party on principle, he would have had a much better chance, and may even have had my vote. But it is not his attempts to downplay his relationship with Fianna Fáil that rankles; it is his attempts to retain that connection in spite of separation.

But to return to the original question of whether it's really an issue - people may see past it. Gallagher is a genial, charismatic speaker and the more people he speaks to the more people he will have voting for him. The media and the internet may make more of this isssue than is "real". Voters may not care, like with Fianna Fáil in 2007. This will play over the next few days, and the next polls will be out in five or six days. That will tell.

Rousseau and Ireland (Part Un)

I've been re-reading my Rousseau. The concept of the General Will is not a difficult one to grasp - in essence, we all willingly give up our freedom to the Sovereign (in a representative demoncracy that being the collective The People, i.e. us) and in turn the Sovereign redistributes that freedom in an equitable and socially conscious way. It facilitates that freedom generally - that is, in line with a General Will, a kind of will that attaches to the sovereign, which should in effect represent, broadly, the will of the people. Of course, it doesn't always work that way.

There are several reasons for this. Rousseau abhorred the concept of representative democracy; yet his ideas on democracy were taken by Robespierre and transposed onto the revolutionary movement in France immediately after Rousseau's death in 1778. Rousseau, to butcher an idiom, a était retourner dans sa tombe. He would not have been impressed. Nevertheless, the French model persisted, spawned the American model, and the post-Colonial English model that ultimately found its way to Dublin.

And now we have a problem. Politics has become deeply unrepresentative. As politics and business merge, the notion of a ship of state - one unit, sailing forth - is abandoned in favour of the administration of state, a kind of elevated functionary above the civil service by dint of some arbitrary mandate that bears no resemblance to any legitimacy that Rousseau may have sought in a government. Everything is about the economy - as it was in the good times (a successful economy will make everything else successful), and especially so in the bad, where the focus is on fixing what's broken in the economy, and trying to soften the impact of cuts. In the meantime, the gap between rich and poor grows ever greater, and the invalidation of the structures of legitimacy accelerates. The General Will is almost ignored; there is a default position. The government does nothing unless it has to do with the economy. But was the General Will ever relevant?

Saturday, April 30, 2011

Sean Quinn and the Lowry effect

The continuing travails of Séan Quinn are continuing to be portrayed by the media as just that - travails, inconveniences, challenges - and remain of interest to the country while becoming something of a cause for his followers in the border region. Of all of the major figures to be "caught up" in the banking crisis and the "travails" of our nation, he alone retains the sympathy of many people, and seemingly suffers only from the ill-judged accusations of the Financial Regulator, and some revisionist appraisal of his dealings with Anglo Irish Bank. He is not a banker, or a builder, or a politician. In that, therefore, he is unique.

Today (Saturday) it was reported that he was refusing to give Anglo information about what he owns, and what he owes. During the week two very straight looking accountants very matter-of-factly told business journalists that the Quinn Insurance business had lost €700m in the year prior to the administrators being called in. This is despite Mr Quinn himself telling the regulator that the business was hugely profitable, and that it would be through the several hundred million euros in annual profit that he could repay the debts owed to Anglo.

Now - step back a moment and consider the debt he owed. It became clear as Anglo fell apart in early 2009 that there were serious problems, and that Quinn was at the heart of it. Much of the commentary centers on Quinn's catastrophic €2.8bn punt that went wrong, but it was merely the inevitable end of an appalling sequence of decisions where Quinn made poor investments, managed his companies terribly, and piled up losses upon losses. This was not just one bad investment, but the inevitable consequence of failure being rewarded again and again and again by the banks, the state, and the infrastructure in Ireland. Either Quinn was stupid, badly advised, or reckless. Given his position in Irish life and society, his responsibility required that he act far more prudently than he did, and he failed.

Was that bad enough? No, of course not. Emboldened by the myopic sheep of Cavan, the defenders of the man who gave them work when none was going, in a Lowry-esque descent into economic ostrich politics that eschews solidarity and national interest, Quinn fights on. He has been slighted. The Quinn Group showed no losses when he was in charge, but now that the administrators are in, they've destroyed the company (he skirts around the fact that he didn't employ a single actuary in his insurance business - go figure).

There was a point when Seán Quinn was a young man with a farm, from which he quarried stone and made a small business a big business. He hired people. He helped people. And they remember him for that. But he crossed a line when he diversified into other segments. When he went into insurance, the Quinn group was certainly a conglomerate. When he took over the former BUPA business, he was hailed by the establishment as a saviour of competition in the health sector. My sense is he began failing almost immediately after that. The extent to which the State facilitated Quinn's takeover of BUPA was extraordinary, though not unexpected. There were some echoes of the Russian oligarch's enrichment in the 1990's with the distribution of former state assets, though in this case it would have been difficult to line up a buyer for a business that was pulling out for legitimate commercial reasons (the community rating issue and all that jazz), notwithstanding the fact that Mary Harney had been fighting this issue through the courts for a number of years at that stage. The thought has to be that BUPA called Harney's bluff, and she got found out. With few people to turn to, Quinn was probably on a shortlist of one (the alternative being nationalisation or merging with the VHI) to take on the alternative healthcare supplier (with apologies to Vivas). Getting into the healthcare business was enormous for Quinn, and made him politically significant if he was not already that.

Having significant interests then in building materials, and by extension the property market; and in the broad insurance business at home and abroad, Quinn set about leverage his systemic importance in Ireland to bail himself out of every increasing debt. While any normal business faced with compromised positions would scale back, lay people off, take losses and move on, he buried them in a sea of credit, and the Quinn group became a black hole into which massive losses mounted, millions, then tens of millions of euros, suddenly a hundred million euros, then more, and still more, and ultimately almost three billion that we know of, tied up in a twisted, gnarled series of cyclical transactions in, with and of Anglo Irish Bank. Quinn couldn't face the prospect of admitting failure, and he compromised all of those businesses, the Irish health service, the competitiveness of the insurance market, and thousands of jobs, in order to save face. That's what all of this was about - saving his reputation.

And so still today he protests, it wasn't me. I was a victim. The regulator is wrong. By implication, there's a conspiracy. He is insidious in his manipulation of those in Cavan who support him, because they believe he's been unfairly treated, and he does nothing to disabuse them of this. They are following a lie, and he fosters the lie. Sean Quinn crossed a line some time ago when he abandoned all propriety, and compromised the interests of his employees, his companies, his bank, and his country. He should be ashamed of himself, and he should be in jail.

Thursday, April 21, 2011

Property Valuation Con Continues in Ireland

My home insurance renewal letter came in the post today. I called the AA, who have my car policy, and they gave me a quote that was half what Bank of Ireland were charging for the same terms. So I rang the Bank of Ireland - the insurance guys first. They told me that one way to reduce my premium would be to reduce the rebuild cost of the house. So I said OK, but wouldn't the mortgage guys be upset with me for doing that? She said that while I was right, it wasn't their concern, but I should probably talk to them (the mortgage people) first. Property values had come down, so rebuild costs would too.

They suggested I consult the Chartered Surveyors Website, who had a guide to proper insurance, and a table in the guide indicating what the likely cost of rebuilding a house is (on page 3). It varies around the country, but in Dublin it's €164 per square foot, and in the rest of the country around €124, to rebuild a detached house like mine. In 2006-7, when getting quotes to build my house, the prices ranged from €85 to €95 per square foot. This is extraordinary. If the pillar bank is relying on these valuations, they're absolutely nuts. Bonkers. La la la la la. Prices for rebuild have probably fallen in the last few years, and direct labour costs would be significantly lower again (and given my experience building my house - not that the builder was bad, he was great - I'd probably be able to do that if I had to; which would be even cheaper because of the extent to which cash now dominates the building trade). Of course it means that insurance premia are inflated, and that means more money for then banks and insurance companies, who are very innovative in finding ways to screw you. But that was only the start of it.

I thanked her for her advice, and rang Bank of Ireland Mortgages. They advised me to look at the SCSI website as well, and then said I needed to get a new valuation done on the property in order that my house rebuild estimate - and therefore insurance costs - be reduced. I asked who should do the valuation, and she said it didn't need to be anyone on "the list". the conversation that followed was extraordinary:
Me: "I'm not sure I follow - can anyone do it?"
BOI Lady: "Well, someone qualified, obviously."
Me: "What qualification do you mean?"
BOI Lady: "Well, an estate agent, or auctioneer, or valuer, you know."
Me: "But you don't need any qualification to be an estate agent or auctioneer."
BOI Lady: "Well, it must be someone working for an estate agent"
Me: "What about my sister in law, she's temping as a secretary for an estate agent in Offaly, would she do?"
BOI Lady: "No, well, I mean, I know some people who work for estate agents aren't qualified, but it needs to be, you know, someone qualified"
Me: "But - you don't need to be qualified in anything to be an estate agent"
BOI Lady: "well..."
Me: "Look, I've a friend who used to be an estate agent, could he do it? I could just throw him twenty quid, you know, that'd do."
BOI Lady: "Well it must be sort of official, you know? On letter paper and all that"
Me: "Oh, sure he has letter paper."
BOI Lady: "But if he's not in business..."
Me: "He has a registered company"
BOI Lady: "Oh that's fine then, if he has a registered company"
Me: "Thanks, I'll do that so."

And there we have it folks. the valuation of my mortgage - that you all are on the hook for - can be based on whatever my mate Charlie thinks if I buy him a couple of pints down the pub. I reckon the value of my house will have fallen even more significantly than the national average, don't you?

Of course, the interesting thing is that as people re-value their homes for insurance purposes, will these new valuations register with NAMA, or the NTMA? Not a hope. Complete disconnect. It's all a con, the whole lot of it.

Friday, April 08, 2011

Improving Youghal: A Two-Sided Business Model Approach

The Irish Times story on Youghal - and the subsequent stories - made for difficult reading. Having grown up in the town, and moved back to the area in recent years, I know it intimately. It has never in recent times been a wealthy town, and ever since the carpet factory shut down in the early 1980s, followed shortly thereafter by Murray Kitchens, it has been in decline.

Today's Irish Times editorialises on the resilience of the Irish Town. I disagree. In America, Detroit was once a huge bustling metropolis, the fifth largest city in America. Today, it has slipped to eighteenth; at the recently completed census, the city asked for a recount because the Federal Funding level is likely to drop dramatically. A once proud city, center of the world in car manufacture, the top eight employers are "public sector" - education, healthcare, government. General Motors is number nine. Its exquisite art deco architecture is now in decay. Cities, towns, villages have been abandoned throughout history. If our towns are not managed properly, they may also slip quietly into history.

Some others have offered some suggestions as to how Youghal might be improved - the rail line to Cork (a feasability study for which is tentatively roadmapped for "sometime before 2020 in the County Development Plan); the monk's road and other tourist attractions; a mayor, and devolved local government. Previously there have been discussions with interested parties on the construction of a marina, and attendant facilities.

Youghal is not the only town, of course, that finds itself in trouble. It has its own plusses and minuses, but there are things in common, including the building boom legacy. The National Asset Management Agency is in control of countless properties and assets that they are trying to generate a return on. For example, let's consider an apartment that cost €200,000, with loans attaching of maybe €150,000, and a market value of - maybe - €50,000. Even with that market value, it is not an immediate value, but a future likely value. There are of course other assets available - building land, houses, hotels, and so forth. In the mean time, these assets are decaying, or costing more money to maintain or complete. Half built developments may be destroyed.

There could be a way to take some of those assets, and make them generate a value return other than simply cash. For example, could the town of Youghal lease a dozen apartments from NAMA for ten years for €1 per apartment, and then use its own resources (the resources of the town clerk, essentially) to maintain them? They could be rented out to holiday makers for €50 per week, the intention being to cover costs of maintenance only, in the hope of generating tourist revenue for the region?

If there are hotels owned by NAMA, the same could apply. If we are making an assumption that the value of an asset is only realisable in the medium to long term for accounting purposes, then it appears logical that we should be trying to maximise the value of that asset in the near term - NAMA could let the property....or it could seek to find other uses for it that would generate value in other ways. There are issues to consider - local hotels would be upset at the competition, for example (although in Youghal, I'm not sure there are many who would have that problem) and others struggling in the buy to let market may similarly complain. However, the argument may be that prices need aggressive downward pressure like this in order to re-set them properly. If the apartments are not being let anyway, that would certainly be true. And only certain types of landlords open apartments for short term let like that.

Other assets could be used for other things. Sites, fields could be alternately developed for short term use - markets, festivals, fairs could be organised on downtown sites where planning was secured for an unbuilt apartment block.

The impact would be to unlock some of the value trapped in a pincer movement of a depressed market for property, and the NAMA / loan structures. Allowing regional or local access to the economic value even for a short time could be modelled to have an impact on the economy as a whole, and accelerate its move out of recession. In turn the properties become more valuable - and NAMA gets its return, while its assets are protected and utilised. Just a thought...

Sunday, March 27, 2011

Ireland's Task: Destroy the Euro

Ireland finds itself in an invidious position. Due to a combination of light-touch regulation, indecent capitalism, and cowboy banking, the state has an eye-watering budget deficit that in percentage terms (at around 32%) is more than Greece, Spain and Portugal combined, and a debt pile that is simply unpayable. Stringent austerity has not helped - sure, the deficit has been reduced - from €18bn to €9bn, roughly, but growth has still not returned. There is no stimulus, and now, there is very little fat to cut.

The bank debt - now sovereign debt - is simply unpayable. At somewhere in the region of €100bn, the interest alone amounts to almost €6bn per annum, which represents 66% of our current projected deficit. Burden sharing, debt restructuring, whatever mechanism is arrived at - none will significantly assist the position without compromising Ireland's future for decades to come.

The Euro mechanism managed to save Ireland from immediate freefall when the crisis hit, but at what cost? Three years into the financial crisis, and four years into economic contraction, we are still searching for the floor, and while the currency trundles along in step with the overweight Eurozone economies of France and Germany, everything else in Ireland seems to be falling in value - businesses, property, and even wages, while not impacted in currency terms, are being impacted instead by taxation, levies and cuts.

The long slow decline in the value of Ireland makes the hardship more difficult, extended and delays any sense of recovery. The ECB and Eurozone partners in the first instance encouraged Ireland to manage its own affairs. Any bank default by national institutions like AIB or Bank of Ireland would be seen as damaging to national standing, the partners suggested; internally, Ireland's leading bankers made similar soundings, in a desperate scramble defence of a system that had been wholly corrupted by several years of unfettered profiteering in a bubble economy. The Eurozone partners sought to protect their own bank exposures to the Irish Economy. With so much pressure on the Government in a single direction, and only Sinn Féin and Labour vocal on the other side, it is not surprising that they took the course of action that they did - issuing the bank guarantee - though it was to prove extraordinarily damaging.

So, we are where we are. Thursday will see the results of the latest stress tests on the banks, and it is likely we'll see a requirement for an additional €15bn-€20bn. We will not know definitively if that is the end. It doesn't really matter - we're long past the point where we can't afford it any more.

If de-merging from the Euro was an option, it would be the one to take. A subsequent devaluation of the Irish currency - and thereby, its debt - in the order of, say, 30%, would make our exports even more valuable than they are now, attract significant incremental investment, fix the problem with public sector pay at a stroke, and also much of the problem with pension funds. Imports would become very expensive, and multi national retailers would find it very difficult to adjust - Tescos especially comes to mind, with their recently found religion of centralism presenting Ireland with Ribena full of blackcurrants that are no longer from Wexford, but from Britain. Irish suppliers would of course be far more competitive for those multis, and given the real estate investment that these guys (particularly Lidl) have made, they will either stay, and switch suppliers back to Irish businesses, or go, and leave Irish businesses compete for themselves.

But of course it's not on the table. A Eurozone "de-merger" would be difficult to effect in cash terms, as the physical currency is easily portable to other European countries. All ports would have to be monitored, and everyone would be required by law to surrender all Euro cash held. We have an advantage in that there is no land border with a Eurozone country, and therefore enforcement would be easier as an option for Ireland rather than, say, Belgium. I don't know how much is in circulation, but any de-merger (and a presumed devalutation) would have to cost in significant cash leakage. It would of course have to be managed in conjunction with our Eurozone partners, and an alternative cash strategy would need to be developed - and cash would need to be printed somewhere.

In the spirit of solidarity (though there seems little enough of that particular tonic to go around these days), the ECB should consider a group de-merger - Greece, Ireland, Portugal, and even Spain could leave the Euro concurrently. This would be a far more structural adjustment, and many of the philosohpical proponents of the Euro would see it as a defeat for the project. While it would be presented as a structured measure, and that these countries could adjust and apply for re-admission, the validity of the project would be questioned, and arguments about political unity versus economic unity, and you-can't-have-one-without-the-other type stuff would permeate political discourse.

It seems however that the Eurozone partners can't agree on much these days, and the facilitate or agree such seismic adjustments in the Eurozone would be unthinkable for most. Domestic politics in Germany, Finland and other places has the current group of leaders hamstrung, and in the absence of weighted voting that the Constitution would have brought (and which arguably was essential for the management of the single currency) they are powerless to do most anything.

Which brings us back to Ireland. If the status quo is maintained, and essentially we carry on as we have been, Ireland's debt will remain unservicable, and Ireland - like Greece - will inevitably default. That would be messy, damaging, and - for Ireland - an awful thing. While the markets have priced in high default risk to bond yields, things are being managed now, and in any case there are no new issues to test the market. There are ongoing initiatives to ease the burden on Ireland, and the markets are betting that the Eurozone partners will not permit a sovereign default.

So we will continue to bleed, and bleed, and bleed, and when we have no more blood to give, the ECB will inject some more blood, and we will continue to bleed. However, should the contagion spread from Portugal into Spain, the sovereign debt crisis will become a major currency crisis. There are very many institutions in Spain that have significant investments in Portugal, and so the contagion effect is more possible in this case. A clean alternative for the Eurozone rather than a partial demerger would be an entire re-set; wind the clock back, and party like it's 1999 - back to your old currencies, allow free float to correct economic imbalances, and rebuild the Euro project over the next three to five years. The institutional work has been done; the project in itself was unique anywhere in the world, and hard lessons have been learned. And, in that circumstance, Ireland would be the least of anyone's concerns.

It is now in Ireland's interests to see the Euro fail. It can be argued that there are few whose interests would not be served, save perhaps the money markets and bankers who would see their Euro bonds converted back into constituent country bonds, and who would have previously thought they were investing in Germany, and now holding Irish, Portuguese and Greek paper (as well as a large chunk of German). As a race, and perhaps this is more about men than women, we do not see failure as progress. We find it difficult to grasp that the learnings from failure can make us stronger; perhaps for the individuals at the front line when failure strikes, it is hard to disabuse them of their discontent. With the passing of the Euro, perhaps Europe can again rediscover the joy of diversity, and all of the things that made Europe and Europeans once great. And perhaps as we rediscover ourselves, we can forge ever closer political unity, as a precursor for a stronger economic union in the future.

Monday, February 28, 2011

Is it the end of Fine Gael? The end of the center?

While copious newsprint has been expended on answering whether this weekend's election result heralds the end of Fianna Fáil, a less obvious question has not been asked - is this perhaps the end also of Fine Gael? Theo Dorgan argued on RTE's The Eleventh Hour last Friday night that Fianna Fáil had been dealt with, and now Fine Gael were being given their chance - which they would inevitably spurn - and the true political reshaping of Ireland would happen at the next election. That, he said, was when the New Politics - presumably some kind of evacuation of the center - would begin.

They are an undeniably populist, centrist party, just as Fianna Fáil were. They will act politically, in the interests of power, reckoning that serving power is systemically analogous to serving the people. They are not ideological, and even the Labour party, their putative junior coalition partner, while more clearly defined ideologically as a party of the left, has moved so far from the lunatic fringe (in large part through its ingestion of the Democratic Left) that it is barely recognisable any more as socialist, or left wing. Left leaning is about as much as one could say, and that they spent the last few days of the campaign arguing for balance in the center suggests that they were about as left of center as Fine Gael were right of it.

Centrism, populism, conservatism. It has defined Ireland for generations. The intellectual argument - a la Theo Dorgan - has always had it that the revolution is just around the corner. The inevitability of radicalism (as an aside, Micheal Martin's talk of a radical center is just stupid. He doesn't understand either centrism or radical) had seemed to be upon us after the arms crisis of the 1970s, then again after the GUBU years in the early 1980's, and even in the wake of Bertie Ahern's blatant and unrepentant cronyism during the Celtic Tiger years. In each case, the inner conservative asserted itself in the Irish electorate. A fear of the unknown, a lack of confidence in the nation as a mature entity, a selfishness presented itself to the polling stations across the country and said "well maybe if we nudge it slightly this way it will be OK."

Another commentator during the week mentioned the Clement Atlee comment on returning from America, that they had two parties dominating, one the Republican party much like the Conservative Party, and one the Democrats, much like the Conservative party. Today, I'm not sure the Labour party - or the Liberal Democrats for that matter - are all that different either, as the Tories moved back towards the center from the right under Cameron, and as Labour under Blair simply snaffled the center vacated by the post-Thatcher Tories under Major. In Ireland, The Fianna Fáil / Fine Gael / Labour triptych is much the same.

It is in this light that I am unsure whether we will have any "New Politics". We're not going to lurch to the left, in search of higher taxes so we can fund the less well off. We're too selfish, and - notwithstanding the recession - too well off to countenance such largesse. We're not going to lurch the right and risk alienating our European neighbours with whom we enjoy such a strong trading relationship.

The only way in which any kind of revolution will be born in this country is if its people suddenly become poor. Whether that is a result of sovereign default, currency detatchment from the Euro, or some other Global catastrophe waiting around the corner, I don't know. Until then, People Before Profit will attract transfers in the leafy suburbs from frustrated housewives feeling strangely unfulfilled by the promise of Ireland, who give their number ones to the establishment candidate who will maintain a not unpleasant status quo, and their preferences to socialist candidates in much the same way as they pay €100 for a social event to help the disadvantaged. "These tickets are not cheap," they will protest. But, then, all things are relative.

Tuesday, February 01, 2011

The Death of Fianna Fáil, and the Unsustainability of the Center

In all modern democracies, there is a problem with the narrative. Most start in some kind of war or other, be it the French Revolution, the American War of Independence and Civil War, and Ireland’s Independence and Civil War. Clausewitz said something to the effect that war is simply politics by other means, and certainly as wars end and politics take over, the war has a great influence on the political structures that emerge.

Once those structures are established, the life or death incantations from the battlefield and other bloodied words become political invocations. Vote Johnny because he saved your sons and daughters from the evil! Vote Mary because she fought for you! You owe your life to Tony! That sort of thing. There is real depth of feeling, strength of purpose, an offence strongly enough felt to fight and die for, be it slavery, dependence, partition, or a massacre. The political organisations that coagulate around the remnants of war develop other identities, along broad socio-political lines. Socialism, capitalism, nationalism, sectarianism, secularism, environmentalism, and religion can differentiate them.

After the War

Invariably, the dominant forces tend to occupy the winners in the war, those who get to dictate the national narrative post-war. They get to decide who the heroes were, what the school text books say, when the days of celebration shall be, and how the society shall be run. In building this national structure, it is a structure intended as a home for that new dominant political movement.

As the memory of war fades into history, and the blood and thunder disappears into the mists of time, politics “normalises”. In order to accommodate the wishes of the majority, the dominant party or parties concede ideological ground to minorities. In reconciling disparate opinion, different ethical, religious and cultural norms, the strength of commitment to a core set of beliefs diminishes. As time goes on, people, parties and movements dilute their zeal, undermine their original purpose, and compromise their very raison d’être.

Fianna Fáil: A Case Study

Thinking about Fianna Fáil, all of this is relevant. Built out of the remains of war, designed as an anti-Brit party, creator of the modern Ireland and synonymous with our politics for almost a century, it has now reached that stage where its identity has been so diluted as to represent nothing at all, and everything. Fianna Fáil became Ireland, for a time, and Ireland became Fianna Fáil. As its authority waned towards the end of the twentieth century, it accepted the inevitability of coalition government, dealing with the leftist labour party, then the Fianna Fáil breakaway right wing party the progressive democrats, then finally the Green party.

Signs of Demise: Coalition

By the time it acknowledged the need for coalition government, Fianna Fáil was already beginning to break up. The Progressive Democrat breakaway represented a group of ideologically driven politicians who wanted in some respects to resurrect the kind of politics that characterised the post-independence Ireland, a driven, thoughtful, productive politics. In some respects they simply wanted to pursue ideas, rather than power and politics as an end in itself. In the British sit-com Yes Minister, when Jim Hacker, a government minister, is asked whether he should reverse a particular policy because it is unpopular in his constituency, he solemnly declares “they are my people, I am their leader – I must follow them!” In a way, this reflected the Fianna Fáil of the 1980s, when the fractious state of the parties in Dáil Eireann reflected a disintegrating consensus about how Ireland should be run. It has yet to be restored.

The 1990’s

Fianna Fáil continued in coalition under Albert Reynolds and Bertie Ahern. There was an admirable consistency to the governments led by Fianna Fáil in the years since 1992. The story, however, was told by the junior partners in government in that time. The Labour party won a massive vote in the Spring Tide in 1992 in what was in essence an anti-Fianna Fáil vote. When they went into coalition with Fianna Fáil, there was a huge backlash, and the Labour vote suffered terribly in 1997. Had Reynolds gone to the park in 1994 when the coalition collapsed, Labour would have been decimated. As it was, they gave up all of their 1992 gains and more in 1997, and only the amalgamation of the Democratic Left managed to allow it a critical mass in opposition.

Hanging On In There

Fianna Fáil continued to attract a large vote, with a seat bonus that was crucial to its maintenance of power. Increasingly, however, they were dependent on older voters, the more atavistic and the middle classes were more clearly divided. The lower classes were deserting them in droves. The first coalition with the Progressive Democrats limped through several crises, but managed to serve the full term, buoyed by the success in the Peace Process, and encouraged by a rising international economic boom that underpinned significant growth in Ireland. In 2002, Ireland voted to maintain the growth in the economy, maintaining Fianna Fáil’s position in power, but decimating the opposition benches by returning record numbers of independents. Local issues – in particular healthcare, and local hospitals – now dominated, as the national position seemed to be of less concern. Fine Gael suffered tremendous losses in that campaign, unable to compete with a successful economy, and – crucially – unable to differentiate itself from Fianna Fáil.

The Peace Process and The Property Thing

It had at this stage become impossible to define what Fianna Fáil stood for. Bertie Ahern had been able to successfully negotiate peace in the six counties primarily because he had no ideology, no attachment one way or the other. He – and Fianna Fáil – was too far removed from the war to empathise too much with the Republican side. Certainly it was now possible for them to objectively discuss peace with the Unionists, and indeed the Unionists saw that too.

After the 2001 financial blip, it became clear that growth that was dependent on the export sector would offer up a hostage to fortune. Ireland would not be in control of its own economy. Thus began a series of measures designed to drive the construction sector into overdrive, in a combination of major national infrastructure development combined with tax incentives for housing development.

The Last Socialist (Except Joe)

In 2004, as people and opinion polls began to become concerned that the country was more like an economy than a society, Ahern famously gathered the great and the good of Fianna Fáil at Inchadonney, and had them listen to people like Seán Healy so that they could become more empathetic, and caring. In an interview for a Sunday newspaper that weekend, he declared him (alongside the inimitable Joe Higgins) to be the only socialist in Dáil Eireann.

There was no cynicism in Ahern’s mis-statement. He was, from a political science point of view, clearly not a socialist. But he was absolutely and unapologetically populist, and at that time when the health service was in difficulty and young people were having difficulty buying their first house, he genuinely set about redistributing the wealth. However, in that redistribution, he did so according to who was more likely to vote for Fianna Fáil, and therefore perpetuate his power. The decentralisation of the civil service was the last great act of Charlie McCreevy, who was summarily dispatched to Brussels for not being socialist enough.

A Party Devoid of Direction

Fianna Fáil had finally become devoid of purpose, save political administration. In that, two things happened. First, they became exposed to crisis – there was no ideology, no plan to fall back on. Second, and perhaps more importantly, they became fodder for the civil service administration. John Bruton’s recent assessment of the Cabinet as the execution arm of the civil service is correct – and unveils a constitutional anomaly where the Dáil is irrelevant, the Seanad an inconvenience, and the country itself disrespected by the politicians who would seek to serve it. In essence, the Cabinet itself has become the fall guy for the Civil Service.

Oblivion on the Horizon?

It is unlikely that Fianna Fáil will be completely decimated at the forthcoming general election. It is difficult to know where the floor is in terms of seats, but to see them winning more than 30 seats (or roughly one per constituency) seems far fetched. There will be constituencies where they will win no seats; and there will be very, very few where they win more than one. Dun Laoighre will be interesting, with a cabinet member and two junior ministers all looking likely to lose their seats – ironically because of their profile; those Fianna Fáil politicians who retain their seats are more likely to be the less well known members, and therefore those less well associated with the party. The Fianna Fáil logos on their election posters will be small indeed.

The movement, however, will be undeniably at an end. Fianna Fáil politicians grasping for the leadership of the party this week have been talking about Fianna Fáil as more than just a party, as a community movement, something belonging to the people, a part of the fabric of the country. That is no longer true.

An Unsustainable Center?

Ultimately, it was Fianna Fáil’s centrism, populism that got found out. For years, people demanded, and people got. Fianna Fáil read the tea leaves, the opinion polls, Liveline and the Sunday Papers, and blithely designed policies around that. In the process, it abdicated an identity of its own. And when crisis hit, and the people said “lead us, where should we go? What should we do?” the party had no answers. When the leadership of the party was in the balance last Thursday evening, members of the party disappeared off to their constituencies nevertheless. The party was irrelevant now.

Was it inevitable? Is populist centrism unsustainable in the face of crisis? Is it inevitable that people in a democracy gravitate to this cobbled-together ideology that is least well suited to serve them in a crisis? Maybe it is. Fine Gael is undeniably now defined as not Fianna Fáil, but it remains centrist, and populist. Labour has succeeded in attracting support because it moved to the center from the radical left. I would be unsurprised if Fine Gael and Labour did not do as well as people think in the upcoming election – independents, radicals will do well. Ireland may well become like Italy. A balkanised political class, and a disaffected populace, but with the added ingredient of an economy in freefall. We need to tread softly now, for we tread on our dreams.