Pain being doled out unequally in society

In commerce, the smallest guy is the one most likely to feel the brunt of ill winds, simply by dint of his place in the pecking order of economic power.

ET tu, Joan? She is not a typical chest thumper, but Joan Burton’s spirit has been captured. Her comment last week about school-leavers going on the dole as a “lifestyle choice” was unsettling. There are politicians who revel in that kind of rhetoric, but Burton isn’t one of them. Her comment illustrated, once more, the manner in which the country’s economic woes are being handled.

Irrespective of who should carry the greatest blame, it is those at the most vulnerable point who are getting it in the neck.

The “lifestyle choice” comment was undermined by Burton’s own statistics. She maintained that between 1% and 3% of recipients of social welfare may be abusing the system.

Within that small cohort, there may also be a small number of people who don’t show huge enthusiasm for jumping out of bed every day and taking to the streets looking for work in a depressed economy. Is that really a big issue in the current environment?

Among the ranks of the unemployed, there will always be a residual percentage who are, for one reason or another, incapable of holding down a job.

Through the years of full employment, the numbers on the live register rarely dipped below 100,000.

Early school-leaving, lack of training and poor physical or psychological health all impact on the suitability of some for work. In the more disadvantaged corners of the State, an upbringing in which the value of work is not instilled can also have an impact. Reducing those issues to a matter of lifestyle choice is not becoming of somebody of Burton’s standing.

But if the lifestyle of a few people on the dole was up for discussion during the week, that of those at the other end of the socio-economic spectrum was shown, time and again, to be beyond the ravages of the country’s woes.

On Monday, it was announced that the supermarket chain Superquinn was going into receivership. By the following day, Musgrave’s had bought the retail element of the company, although this is at issue in a legal challenge launched on Thursday.

The plight of Superquinn is typical of what happened during the boom years.

A group of accountants and developers clubbed together to buy the company from Fergal Quinn in 2005.

They got together under the banner Select Retail Holdings, and paid the Quinn family €450m. The price was high, even by the standards of the time. Analysts speculated that the purchasers saw great potential in the property portfolio in the company, including prime retail sites, which could be developed and expanded. Untold riches awaited the purchasers if things went according to plan.

All of that burst along with the bubble. The weight of the loans had a downward pull on the company. Superquinn has lost some of its market share in the grocery business, but it was still very profitable. The problem was the loans used to buy the business, and for property speculation.

And now, barring a successful legal challenge, the big losers will be the suppliers to the supermarket. There is an estimated €55m owed to small businesses, which are unlikely to get their money. There is every chance that some of them will go to the wall. The livelihoods, the lifestyles, of those who run the businesses are on the line.

The shareholders of Select Retail Holdings can walk away largely unscathed. Their investment is lost, but it won’t affect their lives in any material way. For them, the sky was the limit on the upside, while the downside was tempered by a system that ensures somebody else will take the bulk of the pain.

It’s a story that is all too familiar in the world of banking. On Wednesday, the small shareholders in Irish Life and Permanent shouted that their pain had reached the point of “enough already”. They came in their droves to the EGM, called to ratify the injection of €2bn in capital from the State. The injection will effectively wipe out the remaining value of the shares.

A number of those at the meeting expressed in emotional terms how they had been left high and dry. For those who had invested in the shares to comfort their declining years, a sharp readjustment in lifestyle awaits.

Their fate is in contrast to that of the man who was at the helm while the bank was being driven onto the rocks. Former chief executive Denis Casey left the company in 2009 with €4.5m in his back pocket.

Among the elements of his pay-off was €1.2m in lieu of notice time, as his resignation was put into effect immediately. A man who was leaving a bust bank was paid €1.2m for going quietly. Whatever loss he has endured as a result of the nationalisation of the bank will have been greatly tempered by his obscene payout. Unlike many who attended Wednesday’s meeting, his lifestyle will not be unduly affected by his shocking performance in looking after the investment of the small shareholders.

The lifestyle of Sean Quinn and his family might have been expected to take a big hit on account of a huge debt owed to the citizens of the State. Quinn gambled on Anglo Irish Bank, and ended up with a bill for €2.8bn. By his own admission, he was driven by greed. Had his gamble come off, he would have reaped massive profits that would have greatly enhanced his economic power, and all that goes with it.

As we know, he lost, and his debt has been socialised. The citizens, through nationalised Anglo Irish, are picking up the tab.

If that wasn’t enough, it was claimed in the High Court by the bank last week that the family are attempting to place its €500m property empire, around the world, beyond the reach of its creditors in this country. Quite obviously, despite guff from Sean Quinn about paying his debts, the family intends to maintain their lifestyle at a cost to the taxpayer.

The common thread running through the week has been present since things began to go belly up.

Those at the weakest point, those who are most vulnerable, will be called on to take the greatest hit.

In commerce, the smallest guy is the one most likely to feel the brunt of ill winds, simply by dint of his place in the pecking order of economic power. If there is any chance of anonymous Joe and Josephine Citizen picking up the bill for the gambles and mistakes of the wealthiest, then every inch of that avenue will be explored and exploited with the best law that money can buy. And for the geniuses who must be recompensed with millions, there is no downside when they are exposed as banking emperors with no clothes.

In such a milieu, in such a moral vacuum, the wonder is that any school-leavers bother getting out of bed at all to face another day of being told that they might need to take a good look at their lifestyle choice.