We are in danger of relapsing into our old ‘victim mentality’ says Richard Whelan.
Most of us are aware that Ireland is at a pivotal point at present. We can either take the best from the Celtic Tiger years, particularly our confidence and can-do attitude, or we can retreat into our historic sense of superiority from feeling and acting like a victim.
There’s a real danger that we think this is the 1980s – or worse, the economic wasteland of the 1930s and 1950s – all over again. The difference is all around us, yet we don’t see it. Ireland today is an utterly changed place. Our population is in excess of four million, up from the 2.8 million of half a centry ago, our road and rail networks have been updated and transformed, high tech international companies like Micrososft , Google and Intel have established bases here. Dublin has a remarkable new landmark at the mouth of the Liffey in the delicate lines of the harp motif bridge by Santiago Calatrava named for writer Samuel Beckett, opening up the remarkable transformation of the dockland area of the city. Limerick has made a fine university of what we in the past referred disparagingly to as a technical school. The list could fill pages of text , but it is the difference that matters. Ireland has changed, we are no longer victims. We must not revert to thinking of ourselves as being put upon. The Famine, and its after-effects, are finally over. The question of independence is as settled as it is likely to be for now, and we have shown that we are capable of managing a vibrant and independent country.
Perhaps looking at ourselves through an outsider’s eyes will help. A recent essay on Irish Evolution and the Politics of Identity by a rector in West Point, the Rev Dr. Karl C. Schaffenburg,makes interesting reading at this pivotal moment. “Ireland was virtually passed-by during the industrial revolution (except for shipbuilding and textiles in the North). The country as of the 1970s remained essentially agrarian, and in the “miracle of loaves and fishes” the economy has jumped right over an industrial base into a post-industrial information and service economy. This rapid evolution makes Ireland a test case, for what happens to identity when an economy and society are oriented more to the international flow of capital (both monetary and intellectual) than the production of goods…” he writes.
“In the late 20th century, Ireland has been transformed, modernised and globalised. She has gone from being a land of myth to one in the mainstream of Western society, and she struggles still with this evolution, for the mainstream of Western society is itself being fragmented by the subjectification of truth. And so Ireland clings to invented pasts while seeking to invent a future in which Irishness is more than a theme pub in Berlin or Boston. Ireland has to be more than a franchise, and this requires coherence in national narrative. Seeking this coherence from competing perspectives, the Irish are beset by mistrust both of each other and now of history itself. They are thus , “aggressively [of]the present”, and in this have the dubious distinction of being the most postmodern nation on earth…”
“The Irish, in the midst of profound changes in their economy and society, looking back at ‘another country in a dark age’ thus find themselves living aggressively in the present. Coming to terms with identity becomes an even more pressing issue. For if Irishness involves identification with ‘another country in a dark age’-an option rejected by many, even if unconsciously-what remains save the choice to opt into the European experiment or American globalisation, and a cult of prosperity and celebration of self, all coupled with a level of discomfort with the traditional status of being a victim and a nostalgia for the easiness of such an identifier”? [ Orbis, A Journal of World Affairs, winter 2009. ]
It is only too easy to understand why a country like ours going through such fundamental change into totally uncharted waters while simultaneously suffering the impact of a major banking crisis, an asset bubble (particularly in property), a massive competitiveness problem, and the resultant fiscal and debt issues, could easily make a knee-jerk decision to go back into victimhood. “If no one else can mother me , my feeling of victimhood certainly will”.
We are of course not unique in going through what can be summarised as a period of “economic insecurity and cultural uncertainty.” It is widely accepted that the impact of globalisation in all its facets (economic, financial, social, cultural, and even political) has changed national and local cultures dramatically. Culture has also been impacted upon by political correctness, antiracism and the whole idea of multiculturalism. In many countries, particularly in the EU because of its supranational focus, the power of nationalism as a binding force is generally considered to have reduced dramatically.
This process has been much accelerated and deepened in Ireland because of the impact of the “Troubles” spanning a period of nearly 30 years. The Irish political system has expended a huge amount of capital in a largely successful resolution of a very intractable problem, while having to cope with a range of other problems . It is also likely that the social partnership process in Ireland, which significantly empowered vested interests at the expense of parliamentary democracy, has also had an unintended and unexpected negative impact on the cohesion of the country. While not unique in our current “search for identity”, the extraordinary speed of our transition from an agrarian society to a post-industrial one, and the significant diminution of nationalism as an acceptable binding factor in our society,does make our current position as unique as the Rev. Schaffenburg suggests.
We may wish the current globalised world away, but do we really want to live in the economy of the Ireland of the 1930s and 1940s again? The advantage of globalisation to a small country and economy such as our own is the ability to trade in a worldwide market which generates significant profits and well paid jobs for Ireland compared to the minimal level of economic activity (and consequent lower level jobs and profits) from trading within the country itself only. The choice is either a subsistence economy (which the “best and brightest” rejected through voting with their feet by emigrating) or our current approach of being one of the most open and globalised economies in the world. Accepting this position and the related openness to international developments and particularly international competition, how do we survive and thrive?
The real opportunity and related threat for/ to us is therefore how we handle globalisation.
In other words at the level of “economism” if you will , how do we deal with keeping our competitiveness at the appropriate level in world terms and in ensuring we have a banking sector that supports that and does not “blow-up” every generation or so. In attempting to meet these twin objectives (one really if you see banking, as it should be , as the “servant” of the economy and its people and not the reverse) we must have a shared purpose, as people in Ireland, and generally acceptable institutions we can respect and look to for support as necessary. The lessons of history from the 20th century show that grand ideological plans always lead to disaster so we are better looking for an agreed imperfect road forward, where a change in direction to meet changing circumstances can be carried through with relative ease . It is clear that we are not a very ideological society (despite the best efforts of a tiny minority at both extremes ) and so part of the agreed way forward should be in adopting a pragmatic approach, in other words doing what will work in the circumstances.
We clearly need an agreed narrative and a broad agreement on where we are going and how to get there. Many habits and practices of the past just cannot be continued in this situation — we simply will not survive in a globalised world, and do not wish, I believe, to return to a subsistence level of existence.
I suggest our economic objective should be to be a successful “exporting” (goods, services, art, Ireland as an attractive ” product”, and culture) nation in a globalised world, treating our “customers ” and fellow citizens in a fair, reasonable, and ethical fashion. With our self-confidence re-acquired and with the addition of some necessary humility (generally absent during the Celtic Tiger years) our willingness to work hard, should bring success if we make three simple but quite fundamental changes in how we run our country.
These three changes are:
1. Dismantling all restrictive practices in the public and private sectors, in the professions, in trade, and in our mindsets.
2. Eliminating the concept of “jobs for life” in the public and private sectors.
3. Maximising our performance (and related income) through seeking significant productivity gains (rather than the lowest cost) by focusing on productivity as the key, and by changing our institutions, and individual and institutional sense of responsibility, to reflect this approach.
I briefly analyse each of these below.
1. Dismantling All Restrictive Practices
Over the last century a variety of restrictive practices have built up in the private and public sectors. Some were to to protect jobs and income from predatory employers in a world where the labour force had little legal protection. Others provided excessively high fees for and restricted entry to professional services. Simply put by raising costs, restrictive practices place a tax on trade and commerce.
Today’s legislative and cultural situation is fundamentally different, with the rights of workers strongly reflected in national, EU, and international agreements and legislation. Further as any analysis of our current difficulties will highlight (see the papers on my website) the threat to jobs is now from a lack of international competitiveness in a globalised world and from a lack of credit due to a banking industry in crisis. in these circumstances restrictive practices are now counter-productive to our ability to compete internationally and therefore to achieving our national economic objective.
They should be dismantled fully as soon as possible.
2. Eliminating the Concept of “Jobs for Life”.
The age profile of most countries in the EU is increasing at a rapid rate. Ireland has a population which also is ageing, but lagging most of the rest of Europe in terms of its timing. This gives us the time to deal with this fundamental issue and do it properly, if we start now. As life expectancy increases, people are living longer, with consequent pressure on state budgets for social welfare, pensions, and health provision. To deal with this fundamental change in living conditions the retirement age will have to be extended beyond that of the current norm of 65, at which for far too many all economic activity is intended to cease, regardless of health, life expectancy, ability, or interests.
In the private sector this will mean shifting the emphasis from a “job for life” , an appalling prospect in any case, to equipping young people to take a holistic view of their working lives. Some may opt to have two careers or one full-time career and a second career, or activity, which continues at least until a later ” retirement age” than 65.
In terms of equity, the public sector, which currently has a legally enforced “job for life” structure, should be similarly changed so that staff can be redeployed, fired, or made redundant just as they are in the private sector.
There are also strong arguments for a thorough overhaul of public and private sector pension provisions, building entitlements around a personal “pension pot” which the worker takes from employer to employer, enabling the worker to choose his or her own retirement date, and becoming part of a career portfolio approach which puts the “job for life” and “one size fits all” retirement dates in the dustbin where they belong.
Some of the advantages of empowering workers in this way include cross-fertilisation between the public and private sectors by interchange of staff and skills, greater productivity particularly in the public service where “square pegs” have tended to be difficult to move because of the feared impact on their pensions, and a more contented workforce.
It is worth remembering that the state retirement pension in Ireland is paid at age 66, not 65, with means-tested provision for the interim year, and that Britain has announced a timetable to lift the state pension age. Between 2024 and 2046 the UK qualifying age will rise to 68. It is hard to believe that the Department of Finance in Dublin is not making plans to follow suit. Those changes can help fund better provision for the elderly.
The entire ethos, social environment, and working arrangements of the country needs to change totally to accommodate what is a fundamentally different lifestyle for the vast majority of our people today, arising simply from increased life expectancy and improved health care.
3 . Total Focus on Productivity
What we should do is strive to keep our cost base around that of the midpoint of EU countries, and generate our economic success and national income out of high value-added, knowledge-based, highly productive activities. Thefocus on world class productivity is the essential attitude here — not on low-cost thinking.
Much “reform and restructuring ” in both the public and private sector focuses on cutting costs.
In 2009 a downturn in demand led to Honda UK halting vehicle production for three months. That period was devoted to training staff in new skills and upgrading the assembly lines. In traditional cost-cutting language this was nonsense, yet it is one of the reasons why Honda is one of the most repected car manufacturer in the world.
I have already made the point that we are not interested in being a low wage economy in Ireland . For most countries cost minimisation is an inappropriate or unattainable objective. As an example four years ago Japanese companies were shifting some of their operations from China to Vietnam, as the latter was seen as the best source of low-cost operations. Ireland can never compete with that and should not even try — it is not the business we are in!
We will move significantly down the road to being world leaders in terms of value added, knowledge-based, highly productive activities, just by fully implementing the recommendations on dismantling restrictive practices and changing the social, economic, and financial environment to support the career path for life rather than “a job for life” approach.
The other change that would make a huge difference to our productivity and national harmony would be the acceptance by us all of responsibility for our actions and inactions. Over the last 20 years we seem to have particularly dropped the idea of leaders in any field or area of activity accepting the blame or responsibility when things go wrong. This has led to huge growth in cynicism, and the diffusion of this sense of irresponsibility, throughout the entire country. Through legislation, best practice corporate governance changes, and courageous example, a ” cult of responsibility” needs to be embedded throughout the entire private sector, the public sector, our political class, and particularly in the banking industry.
Consequent Changes in Our Banking Sector And Related Property Assets
To accommodate these simple but fundamental changes in our economic and social activities some simple but fundamental changes must be effected in our banking sector.
In addition to the three changes set out above, the following improvements should be effected in the sector. These latter recommendations are directed at the domestic banking industry in Ireland, the industry that is in severe crisis at present, and not the international financial services industry, located in the IFSC in Dublin.
- Any institution that is ” too big to fail” should either be broken up or turned into a ” utility” type banking operation. If it is too big to fail (a number of our existing banking groups seem to be such) and is not broken up or converted into a utility operator, we face the likelihood of a similar crisis again in the future. If breakup is impossible for practical or other reasons, then the bank should be forced to act as utility finance provider, focusing on deposit taking and lending on a low risk, controlled basis, without involvement in higher risk lending, derivative activities, high risk foreign-exchange transactions, etc.
- Based on international comparisons (particularly using the price to rents ratio), residential property values in Ireland may still not be quite at sustainable levels.[ Ratio Rentals — Global House Prices, The Economist, January 2 -8 2010.] It is in everybody’s interest – the public, borrowers, lenders, and the government, that property values are reduced to such levels and stabilised to let people get on with planning and living their lives, knowing the full facts of the situation they are in. To stabilise the property market some changes in addition to a final price mark-down may be required, as well as the normal flow of funds from the banking sector. (By normal here I do not mean the abnormal “carry on” that took place over the last few years of the Celtic Tiger. I mean normal prudent banking lending.) One change may be to eliminate stamp duty, which in the way it is imposed at the time of sale appears to be an inhibitor of a normal market in property today in favour of a lower tax evenly spread over the period of ownership, and providing funds for local infrastructure. Others might include lengthening mortgage terms, as on the continent, a societal change that the residential home and related mortgage is left to the next generation, etc etc.
- Finally a series of once-off changes may be needed to deal with the overhanging problems in residential and other property and related debt. There is significant underused intellectual resources in this area in the banks themselves, in law firms, and in accounting practices. That intellectual input should be brought to bear, in a very transparent fashion, to generate unique and effective solutions to the problems of incomplete developments, unoccupied apartment and housing properties, “negative equity”, and the entire structure of our property market. As an example perhaps by creatively using unoccupied apartments we can help provide accommodation for “new starters” on a cost-effective basis for the first five years, which would also help the market overall, and potentially change our national desire to own rather than rent property, which is the norm in many continental countries.
Economism Is not Enough
But “man does not live on bread alone.” I have shown elsewhere [ “Secularism – the EU is the “Odd-Man Out”, 1 March 2007, The Irish Catholic, and on my website] that while secularism appears predominant worldwide because of secular development in Ireland and Europe over the last 20 years, in fact worldwide secularism is on a decline, and religious observance is becoming the majority norm. Because of scandals attaching to the Catholic Church in Ireland we have in many cases “thrown out the baby with the bathwater”, and left people adrift in an unfamiliar and unfriendly world.
An increasing number of medical and other studies worldwide show that each of us is a product of a dynamic interaction between body, mind, and spirit. To be as healthy as possible in a holistic sense the spirit also needs to be engaged, exercised, and developed so we can express our spirituality in a healthy fashion and/or relate to the transcendent in a manner that gives meaning to our lives, and helps us deal with the travails and problems we will inevitably meet on our journey.
In this sense, it is clear that space and support should be available for each of us to maximise our health from a holistic perspective and to develop the spiritual aspect of your personality and its related practice, without undue influence or attack from fundamentalist religious influences or secular programming.
Ireland enters the 2010s partially suffused in its familiar mantle of victimhood. It truly is our choice as to whether we spend the next decade “wallowing” in that mantle, fighting amongst ourselves, and watching our children emigrate again, or whether we shed our comfortable victimhood, take our future in our own hands, and by making a small number of simple but fundamental changes, take full, mature responsibility for our future and that of our children. Success, I believe, depends solely on us and that decision.
- Why a Complete Rethinking of our Political Economy is Necessary (April 2010)
- The Economy is Broken – How Do We Fix It? (December 2009)