We’ll miss the troika’s drive to get things done

When the troika were inbound, I had a chat with a well-known economic commentator. He relayed the views of some of his relatives on the regime: “Jaysus, the IMF, sure they’ll be worse than the Tans.”

Well, as it turns out, the IMF were by far the lesser of three evils. By contrast with the bumbling of the commission and the fumbling of the ECB, the IMF were clearheaded and straight.

They have form in this — their raison d’être is to come in and restructure countries to return to a paying basis.

They are experienced, but their experience was subjugated to the Jean- Claude Trichet ECB which was fixated on the narrowest interpretation of their brief, Trichet endeavouring to show the Bundeshawks that when it came to monetary masochism, a French Central Banker could be more Germanic than the Germans themselves.

With the possible departure of the troika, we can now think the unthinkable; we will miss them when they are gone. For the troika, mainly the IMF, have shown a willingness to drive forward change and to force events to a head.

Historically Irish elites have adopted the King Log approach, doing as little as possible to disturb the pond. The recent report on implementation shows a growing frustration, I sense, on the part of the troika, with Irish implementation. In a Dáil where there is heavy representation of lawyers, in a state where lawyers dictate state moves, it is clear that by overt persuasion and covert influence, the lawyers have stalled and delayed meaningful reform.

We have also seen little in the way of meaningful action on the crisis of unemployment. Despite the real level of jobseeking being close to 25%, and that after a haemorrhage of hundreds of thousands of people, we still persist with the old fashioned “labour exchange” model of government intervention and the one-stop shop approach is stalled. The existence of large pools of unemployed is of benefit, in the short term where most live, only to those employers who need compliant workers

In education, we see a persistent attempt to narrow and make more and more vocational the state system, despite the manifest failure of government “picking winners” strategies and that the employers themselves want broadly educated flexible thinkers. Again this is of benefit to the mandarinate in the Department of Education and the Higher Education Authority and to the employers de jure.

We see little evidence of thinking about the post Foreign Direct Investment (FDI) era, assuming that a large part of measured FDI is related to tax arbitrage.

Across the world, there is at least lip service to the need to ensure corporations pay tax and do not engage in tax arbitrage. The Irish elites have, to the most part, denied that this mood exists, and suggested that even if it does, it doesn’t matter, as despite all the evidence, we do not facilitate such.

We see in the banks perhaps the most egregious example of elites and insiders stalling.

Having refused to deal with residential mortgage arrears for years, the banks have now managed to get a more liberal repossession regime in place which they shall drive. Leaving aside the social issues, large scale repossessions will result in a worsening of the banks’ losses, and if the banks are required to keep very high levels of capital, that will mean either bailing in depositors or more taxpayer injections. However, at the top end the insiders remain entrenched and enriched.

All these remain despite the best intentions of the troika. Generations of passive aggressive, slow rising to the top of the heap, regardless of the state of the heap, have endowed Irish insiders with the ability to obfuscate, ignore, stall, and stymie at a world class level.

- Brian Lucey is professor of finance at Trinity College Dublin.


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