BEWARE the soothsayers. They have been wrong before and they will be wrong again. The ESRI says the economy grew by 5% this year and will grow by 4% next year.
They say most of the growth is coming from “domestic sources” with a “strong forecast” for household spending.
Bank of Ireland says employment grew by 3% this year and will grow by 2.4% next year. The ERSI says our unemployment rate will then stand at 5.4%, essentially back to where it was before the economic crisis.
Strong growth and lower unemployment have forced wages upwards four times more quickly in the past year than in the previous year. Exports grew by 4.8% this year and are expected to grow by roughly the same amount next year.
Two out of three Irish firms are planning to expand their businesses in the coming year. Investment is expected to grow by 6% in 2018.
The economic commentator David McWilliams declared himself “optimistic” about the future of the Irish economy in his Irish Independent column this year. In fact, he wrote he had been optimistic “for some time now”.
The man credited with coining the phrase, “Celtic Tiger” says the Celtic Phoenix, “can soar”.
Happy days, it seems, though McWilliams cautioned in his autumn series on TV3 that another housing bubble was blowing up and considering he was bang-on about the last housing bubble, he’s worth listening to.
As he describes his own prescience at the time of the last housing crash: “I saw this earlier than anybody else and spent the best part of a decade trying to warn as many people as possible.”
What I have never heard him say is that he was completely wrong about the prospects of the Irish economy in the post-bust period.
We could expect nothing but enslavement because we saved the banks, he wrote in the Irish Independent in 2010 in a column given the headline, ‘It’s time to shout stop — NAMA is grand larceny’.
“These banks,” he wrote, “have nothing to do with us…. The interests of the corrupt, greedy and plainly stupid bankers (have been prioritised) over the interests of the average citizen… When investors see that we are being ruled by financial fanatics they stay miles away because they know investing is pointless.”
To say that this was an idea which flew would be a vast understatement. The idea that the politicians had prioritised the bankers over the rest of us because they were their best friends acquired the status of fact in Irish discourse for many years.
It not only nearly destroyed Fianna Fáil, it all but destroyed the Labour Party who spouted this narrative before the 2011 election, then reversed engines in office.
It eroded public trust in politics and in public institutions, but not to the degree foreseen by another previously successful soothsayer, Morgan Kelly, Professor of Economics at UCD, who had accurately predicted in 2006 that Irish property prices would go down by 50%.
He too was wildly off the mark in his predictions on the future of the economy after Bank Guarantee. Picturing the politicians saving the banks instead of the people, he said: “As ordinary people start to realise that this thing is not only happening, it is happening to them, we can see anxiety giving way to the first upswellings of an inchoate rage and despair which will transform Irish politics along the lines of the Tea Party in America. Within five years both Civil War parties are likely to have been brushed aside by a hard right, anti-Europe, anti-Traveller party that, inconceivable as it now seems, will leave us nostalgic for the usually harmless buffoonery of Biffo, Inda and their chums.”
At least Morgan Kelly has since agreed that the turnaround in the Irish economy and the scale of the downturn had been less severe than he thought it would be.
“This is very surprising,” he told The Irish Times in 2014. “It is a big puzzle.”
I would say that Kelly misunderstood the impact of Euro membership on our response to the crisis and our chances of recovery. Euro membership was the key factor in both.
As recently as 2014 he was predicting that European stress tests could force the Irish banks to call in bad loans to SMEs and said: “We could be facing something really, really terrible quite soon.”
Well I suppose we could all be facing something really, really terrible quite soon. That’s the human condition.
It’s also the human condition not to be able to predict the future with accuracy. We all predict along the limited beam of our own flashlamps.
It’s the human condition too, to seize on narratives which please us and to remember the predictions which came to pass while forgetting the much bigger number which didn’t.
For writers like The Irish Times columnist Fintan O’Toole and many other lesser writers as well as thousands of online commentators the narrative of the bust was the predictable working out of the wrongs of capitalism epitomised by Fianna Fáil.
The rift between socialism and republicanism goes back to the foundation of the State and it has undermined our politics.
If the Labour Party, rather than the Progressive Democrats, had deigned to go into Government with Fianna Fáil in the late 1990s to the late 2000s we might not have had the bust at all.
Fianna Fáil has had many faces and some have been socialist, including their historic commitment to public housing and free education. Fianna Fáil has done many clever things and that is the reasons that Ireland today comes in at No. 8 in the UN Development Index, coming from a position of abject poverty at the State’s foundation and relative poverty even as late as the 1980s, when we came in around no. 30 in the world’s wealth and well-being index, stayed in education about three years less and our lives were six or seven years shorter.
This is a narrative which is disallowed under orthodox Left Wing thinking in this country: the rough sleeper and the autistic child are shamelessly used to prove that the common man faces doom while the “elite” drinks champagne from dancers’ slippers.
I agree, Fianna Fáil has also done many God-awful things, including the free-for-all which preceded the banking crash.
But the hard fact is, they handled the banking crash well. Fine Gael and Labour — the political system — continued to work out the broad terms of Fianna Fáil’s plan and the result is an economy which has recovered in double-quick time.
Or so it seems, according to the predictions for 2018, most of them issuing from sources which failed to predict the bust until it had already happened.
Take your pick between these and the predictions of those who have their own narratives and stick to them.
Distinguish stories, of hope and of doom, from established facts. Trust your gut and the evidence of your own eyes. And have a peaceful and prosperous 2018.