The Big Lie - Who Profits from Ireland’s Austerity?
People in the Dublin convenience store business told me in 2007 that an early warning signal came up on their radar. Polish builders who so loved their cholesterol-fuelled breakfast butties had disappeared as suddenly as they came. This had been good business.
When the cranes cranked their last, the Poles withdrew and the consequences hit the street with immediate effect. As you would expect from one of the country’s leading journalists, this well-researched book confronts the propaganda that austerity has merely hit Ireland as it has hit everywhere else; that we’re all in it together.
It’s just bad luck; a knock-on effect of a US structural collapse far, far away. As long as we share the burden through cuts and more taxes we’ll come through. The Big Lie truly drills down into the street, the hospital waiting lists and the kitchen economics of the majority.
There’s no conspiracy theory — this is conspiracy fact. Gene Kerrigan names and shames those responsible in an unprecedented way. He doesn’t much care for greedy bankers and corrupt politicians. He screams out their huge salaries and the lapses in Irish tax legislation “...laws that were created but were not enforced”.
As the managing director of Mitsubishi Bank, Tadashi Kohno said: “We have always been on the look-out for places with as little legislation as possible.” Ireland became a nation that wined and dined the wealthy corporates and positively encouraged them and their well-paid executives to opt out of the taxation system.
The first stage of the new story of woe begins in 1994, where it seemed that hard work and a period of genuine economic growth of 5.5% (imagine) and in 1995, 9.7% (higher than China today) and constant growth in employment through to the millennium. It seemed that everything was hunky dory. The second stage was one of muddling along.
These were borrow and build years, where the true and underlying statistics that should have been a cause of worry were only raised by lone commentators such as George Lee, the former RTÉ economics editor, who urged looking beneath the surface. He was mocked as a doom monger, when all he did was some sums that failed to add up — and made them public.
Onward Ireland into stage 3: The bubble itself, from 2003 until 2008, when, precipitated by world events and a global economy in the hands of space cadets (in the UK one banker was in charge of tertiary lending based on Nasa-inspired econometric predictive modelling, about which he knew nothing). All models assumed growth, which was not actually there as it was obscured by a magnificent debt. Politicians were unable to confront the issues because the gravy kept on pouring.
It would go on forever, wouldn’t it? After all, look at the value of property. Up went the price of your house: Boom.
Then there was a stage 4, of course. This was the big dump where everyone got dumped, and dumped upon. It was agreed there would be cuts, so instead of closing 985 beds, the government closed 6,377. “The ship of state was steaming towards the rocks; they were pressing all the usual buttons — and nothing worked”. The money held and saved by the treasury had to be raided to prop up those that had caused the problem. Corporate and political mishandling was rife, and one of the saddest stories was that of Telecom Éireann. In Jul 1999 shares went on sale because of some EU “fashionable neo-liberalism principles”.
Several million pounds was spent on changing the name to the new, go-faster Eircom which attracted 570,000 investors partly infected by the privatisation frenzy in the UK of previous years under Thatcher, (once scolded by Harold McMillan for “selling the family jewellery”), and an aggressive marketing campaign. Employees got a good share of the takings and everyone seemed to be on “rock star wages”.
Consultants, lawyers, and advisers put in their invoices totalling about £70m. More gravy poured. Shares costing £3.90 rose quickly to £5.20, and the government managed to trouser about £5bn. This was prudently put away into the National Pension Reserve Fund. That was until the banks collapsed, when the reserves had to be handed back to the bankers who had run out of cash to the point where banks would not have been able to trade and ATMs would have ceased to work.
Ireland’s bailout has now moved from the manageable to the unimaginable. The nine-tenths of people who held on to their shares were stunned, “disbelieving as they quickly lost a third of their value”. The family jewels had been squandered on miscreants. “Eircom had been efficient and profitable, with 13,000 workers and a bright future. It was supposed to have a crucial role in the brave new online world... privatised, a plaything for the rich, it became a debt-ridden hulk... by 2012 it was on its way into examinership, with net debts of more than €4bn. By then it had shed all but 5,500 of its 13,000 jobs.”
Debt is not new and it is not Irish, although the Irish have taken to it with relish through the inept behaviours that Gene Kerrigan sets out so well in his story. Some of his words carry emotion, and that’s not a surprise. This is really a story of the human condition and not a conspiracy of Irish making. Just as certainly as Princess Diana was killed by a drunk driver in a tunnel, Ireland’s debt was caused by greedy people everywhere who did not know when to ‘call it’.
When the Greeks were in debt in 600BC, debtors were made to be slaves. Now there’s a thought for a nation seeking to admonish those that are guilty of causing the mess.