Gung-ho champions of free market are on the run at home and abroad
The PDs won’t be missed. For much of their history, it has to be said, they brought a degree of colour and excitement to Irish politics.
Their founding was a statement of integrity at one level. Des O’Malley, who set up the party, was (and still is, thankfully) a man of integrity and courage who went on to have more influence on the party he left than he ever could have by remaining within its ranks. He can claim credit, I believe, for finally forcing Fianna Fáil to come to terms with the principle of consent in relation to Northern Ireland.
For years under Charles Haughey, and despite the efforts of Haughey’s predecessor Jack Lynch, FF had remained ambivalent about the notion that Northern unionists couldn’t be coerced into a united Ireland. O’Malley’s assertion of his own view of what the republic meant, although it led to his expulsion from Fianna Fáil (and although it was articulated in the context of a debate about whether adults in Ireland should be entitled to buy condoms) was one of the catalysts of change in the Ireland of the 1980s and 1990s.
Other things the PDs did in government are worth recording and remembering, too. O’Malley helped to save the Office of the Ombudsman when Haughey was trying to subvert it.
Mary Harney made her mark originally by a series of measures that helped to eliminate smog from Dublin — and people have forgotten now what a health and environmental hazard that was.
Oddly, both of those achievements represented a view of the world entirely at odds with the underlying philosophy of the PDs. The ombudsman exists to protect citizens against malpractice on the part of the State and has become recognised as an integral part of our democratic functioning.
But no one could ever describe the ombudsman as an expression of free market enterprise — the philosophy of that office is informed by a commitment to equality and rights.
And Mary Harney could never have eliminated smog without a very significant intervention in the operation of the market. In fact, it was probably the first time in the history of the state that any supplier of otherwise legal goods was told what they could and couldn’t sell. A variety of other measures was tried first, but it slowly dawned on Harney and her department that only a legal ban on the selling of coal was going to work. Other “achievements” associated with the PDs probably belong more in the realms of mythology.
Michael McDowell was fond of claiming the PDs had introduced the idea of using tax cuts to stimulate economic growth and that a low-tax economy had to be sustained at all costs.
And indeed, in the first of his budgets as part of a PD-inspired government, at the end of 1997, Charlie McCreevy had reduced the top tax rate and the standard rate by 2%. These were the first of many such cuts which have given us the tax regime we have now.
Ruairi Quinn had reduced the standard rate by 1% in the previous budget, but had avoided introducing wholesale cuts until the economy was in a position to afford them. And by the time McCreevy won office with the support of the PDs, the economy (thanks in large measure to Quinn’s prudence and careful management) was indeed in a position to afford lower taxes.
At the very beginning of his budget speech, McCreevy admitted that “1997 has been the fourth successive year of very strong economic growth. This is once again being translated into substantially higher numbers at work — about 50,000 more this year. At the same time, inflation has remained moderate at around 1½%”.
In other words, far from using tax cuts to grow the economy, the PDs insisted on a distribution of that growth through the cuts. And the record shows that such distribution was unequal, with those on higher earnings consistently being awarded the lion’s share of the spoils.
But the PDs are gone now, and they went in a week when the global capitalist system was under more strain than at any time in history. It would be deeply ironic indeed if the PDs died in a week that also saw the death knell of the forms of capitalism with which they were indelibly associated — the “inequality is good for us” brand based on individual greed and a lack of care for anyone but the rich and famous.
It’s probably overstating the case to say capitalism is on its last legs, but surely this past week has seen a whole series of power shifts. I’ve written here before, for example, about how the Chinese have become a major economic force in the world. They now own a significant portion of American foreign debt, and that is bound to have enormous repercussions over time for American influence in the world.
Within America, the decision of a Republican administration to effectively nationalise several major banks and insurance companies is a seismic one. They may have allowed some of the investment banks to go to the wall, but they surely won’t be missed over time. Many people in the ordinary banking sector — on which we depend, whether we like it or not — see investment bankers, with their history of growing rich on war and conflict, as parasites.
The fact that the US government is now the largest mortgage provider in the world, at least until it can get a sustainable new vehicle set up, is surely the ultimate statement about how well an unregulated and essentially uncivilised free market works.
HERE at home, there were huge sighs of relief throughout the financial sector when the regulator intervened to put a stop to short selling. Most of us have no experience of this practice, which seems to consist of using other people’s money to bet on disaster.
How much more regulation do we need? Stock markets were originally established to enable enterprises to attract capital. As returns became slower, and individuals became greedier, the stock markets of the world began to change into iniquitous gambling dens.
The decadence and individual greed that the stock exchanges have come to represent — and have represented since Margaret Thatcher was in her prime — are precisely the qualities that have destroyed empires in the past. The US financial system has been humbled in the past few weeks, but it’s too early to say whether any lessons have been learned.
The primary lesson is the same as it has always been. Free enterprise is a good thing when it’s civilised. A free market enables people who have income to make choices — although it makes no contribution whatsoever to the lives of people who don’t have income. But when control breaks down and greed takes over, both the free market and free enterprise become corrupted very quickly.
And if civilised control isn’t reasserted, the entire house of cards will fall.
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