We need to make fairness and dignity the building blocks of our new society

SOME time ago I brought a visitor from Holland, an educationalist, to visit a school here.

The trip involved picking him up at the airport and driving to the south side of Dublin.

My visitor, who hadn’t been in Ireland for some years, marvelled at the wonderful road we were travelling on.

“What changes there are here,” he said, as I pointed out the great new highways we were passing, with smooth junctions leading off to the north, to the west, and to the south. Soon enough we got to the school and I showed him around. It has a modern, attractive facade and a very good staff team. Best of all on the day was a collection of bright, confident second-level students.

But he was very taken aback when we got to the collection of rotting portable buildings at the back of the school, where about half of the school’s population are educated.

I explained that we had been lobbying and campaigning for years to have these portable buildings replaced, but despite the country’s evident wealth it had never been a priority for the government. They were smelly and dangerous in spots. And they lacked basic amenities — it had never been possible to plumb toilets into them, for instance.

As I was driving my visitor back to the airport I asked him for his impressions. “Well,” he said, “I look at your roads and I look at your schools. Truly there are two sides to the Irish coin.”

I’ve often thought since how right he was. In biblical times there were seven years of plenty followed by seven years of famine. In the history of the world, apart from periods of war and pestilence, I wonder had that ever happened again? And yet it looks like it’s happening to us.

I know that our story might not matter all that much in the middle of the crisis that is now swirling around Europe and the euro. But some day, when the history of all this period is written, there will be a realisation that what happened in Ireland was genuinely criminal.

A huge property bubble was deliberately stoked in order to win elections. Massive wealth was generated and given away, in tax breaks, unsustainable social welfare increases, and further property incentives, all for the purpose of influencing the electoral cycle. And even as it began to unravel, we were made endless false promises of soft landings and manageable slowdowns.

Some soft landing. It has come crashing down in its entirety, leaving us — apparently — with few choices but to endure seven years or so of deep austerity. A report recently published under the auspices of the Central Bank shows just how massive that crash has been.

The authors of that report, Mary Cussen and Gillian Phelan, point out that Ireland became the first euro area country to officially enter recession in September 2008. Since then, we have lost an unbelievable €281 billion in the country’s wealth. To put that in perspective, that’s almost twice, on a proportionate basis, of the American wealth lost during the Great Depression that started with the stock market crash in 1929.

The authors point out that it is households who have borne the brunt of this collapse. As they put it: “Irish households have suffered by far the largest decline in net wealth, largely due to their exposure to the housing market. Households were also the first sector to experience a reduction in their net wealth, as house prices began to fall from Q1 2007 onwards. In total, the value of households’ net wealth has fallen by 32 per cent from its peak in Q4 2006.”

In even more stark terms, the report says that by the end of 2010, the net wealth of Irish households had returned to the level it was at seven years earlier. The entire growth of the intervening period had been wiped out, essentially by the collapse of the property bubble.

At one level, a collapse in wealth measured by a fall in house prices might not be the end of the world. Our houses may be worth a lot less, but we’re still living in them.

However, that doesn’t take into account the other effects of the recession. As the report points out, people with higher incomes might have suffered a greater fall in wealth, because their houses were more expensive to begin with. But their savings were higher too — and therefore their ability to cope with change. The report makes the point that poorer families are much more likely to be at risk of losing their houses altogether, since they are more likely to be in mortgage arrears, and they don’t have liquid assets at their disposal in times of stress.

That’s definitely one side of the coin. Our government is clearly struggling to come to terms with the enormity of our situation, and it is surely remarkable that most political discourse at present is about the need to cut more supports from the very people who have already suffered most, and are most vulnerable to further market changes.

That’s because it’s easy. We’re broke, the argument goes. We have no choice but to cut our cloth, tighten our belts, put our noses to the grindstone.

Those clichés ignore another side to the coin altogether. Look at this story by Ann Cahill, the Irish Examiner’s European correspondent, from five or six weeks ago. “Ireland’s wealth status has dropped back to joint third place in the European Union’s list of gross domestic product per capita, but the fall was less than for Greece and Italy,” she says.

Quoting Eurostat (the European statistics agency) she says that Ireland was for

years the second-richest country in Europe, per head of population, behind Luxembourg. At the height of our wealth and ostentation, when we were showing off to everyone, our wealth was nearly one and a half times the European average. Now, after we have seen this terrible collapse, we’re still nearly one and a quarter times richer than the average.

Isn’t that amazing? Ireland is still a rich country in European terms. We’re being bailed out by people who are a lot less well-off than we are, but who have managed their affairs much better than us. Other European countries, like Bulgaria, Romania, and Latvia, hover around half the European average or less.

So perhaps it’s time we all got a bit more realistic. If you put both sides of the coin together, a slightly different picture emerges. Yes, we’ve lost a lot. Yes, we have to manage our affairs a lot better in future than we have in the past. That means all our expectations have to be more modest, and all of us have to learn how to contribute towards balancing the books and helping the wealth to start growing again.

But we are still, relatively speaking, rich. Rich countries can — and must — be civilised countries. We missed the opportunity to build a civilised country when we were rotten with cash. We need to build a sense of civilisation — and that means fairness, dignity, respect — into how we rebuild our national wealth.

Next time, let’s not just measure our wealth in bank notes.