Bailout boys are good for our democracy

LET’S hear it for the imperial forces exercising their will on the country.

The bailout boys were back in town last week and they got a hard time of it from elements in the media. They are portrayed as imperial forces imposing austerity on the country’s citizens.

Really? A case can be made that the bailout boys are exactly what we need right now. Perhaps the country isn’t just financially broke, but has got to the point where its democracy is also kaput, and some commonsense from the Troika is just what the doctor ordered.

How was the country governed before the arrival of the bailout boys? One example was provided in an interview published last week of former Justice Minister Dermot Ahern in Parchment magazine.

Ahern said that the bailout boys had little interest in reforming the legal system. For three decades, there have been reports on how to make the system more affordable for ordinary citizens. Yet change was resisted at every turn by those in the business. Politically, no government wanted to take on such a powerful vested interest.

Then, in walks the bailout boys and departmental officials see the opportunity to effect change under cover of the Troika. Ahern revealed that reform of the system was included in the Memorandum of Understanding (MOU) at the behest of departmental officials.

“They (the Troika) didn’t put them (the terms in the MOU) in,” Ahern said. “They were put in by the Department of Enterprise Trade and Employment and the Department of Finance because they were promoting the Competition Authority report.”

The current administration could now go where successive governments feared to tread. Since then, Minister for Justice Alan Shatter has initiated his legal services bill under cover of the Memorandum of Understanding. (Some in the business say he has gone too far, but that’s another issue).

Would such much-needed reform have taken place without outside forces? Not on your life.

Similarly, efforts to reform other vested interests. Does anybody know why we have the highest paid hospital consultants in the world? In a political culture where vested interests have a steely hold over government, reform was always long-fingered.

Other policies introduced under cover of the MOU make a similar case. All economic opinion, from left to right, agrees that a property tax should be a feature of any developed economy. For one thing, it would have had some impact on arresting the property bubble that landed the country in its woes.

Yet, without outside intervention, no government would have touched the issue with a barge pole. Ditto water charges. These things are painful and are being met with resistance. But the structure of a sustainable economy demands such reforms.

A change to the law on bankruptcy is also included in the MOU. Would any government, of its own volition, have taken on powerful banking and property interests to bring in a bankruptcy law for the modern age?

These are just some of the positive results of intervention on how we are governed. The political culture that prevails in this country would have been loath to address these issues if left to its own devices.

That culture is obsessed with the short-term, with appeasing vested interests at all costs, with following popular opinion among the electorate rather than leading for the greater good.

There is precious little philosophical difference on the various policies among the main political parties. Observe how the policy agenda of the main parties is entirely interchangeable, depending nearly exclusively on whether they are in power or opposition.

The only guiding principle is how to acquire power and keep it. This carry-on was exacerbated hugely throughout the last decade, when there was money to burn, and all vied for a way to burn it in pursuit of votes.

None of which is to say that everything in the MOU is positive, or has to be undertaken. Minister for the Environment Phil Hogan is moving to lift the limits on space for out-of-town retail units. This might well open up the way towards hypermarkets and impact negatively on the centres of major towns or cities. When questioned about it in the Dail, Hogan said that the MOU requires a study to be undertaken into whether the limits could be lifted. If the Government so wished, it could well commission a study and long-finger the issue, but Hogan appears intent on pursuing change under cover of the MOU. The policy is certainly questionable, and should be debated on its merits rather than imposed as a fait accompli.

In a separate vein, the Troika stands accused of imposing austerity on the citizens. That charge is wide of the mark. Austerity was introduced in this country in 2008, two years before the bail-out boys flew in. The collapse of tax receipts from the property bubble meant the country was spending far more than it was earning. To get things moving again, public spending had to be reined in. There is little argument in politics about this strategy, although, correctly, much argument on how to go about it.

So the Troika didn’t introduce austerity. Even if the State had full control over its finances, austerity would continue unless there was a radical shift in government policy. Remember, in terms of the big picture, the current government is largely following the path beaten by the previous.

The Troika is being blamed for the continuing madness of pumping money into the moribund Anglo Irish Bank. That policy began before the Troika arrived. Last week, division was evident on the matter between the elements of the Troika. The IMF, apparently, is not pushed on whether the promissory notes for the bank continue to be honoured. The ECB, on the other hand, refuses to pull back from its rigid stance on the matter.

But even if the country was self-governed, its relationship with the ECB wouldn’t differ much. The European Central Bank continues to prop up the Irish banking system. Few in the political classes want to take the chance of letting all the banks go bust. Therefore, the stick the ECB holds over the country is as much, if not more, attributable to its function in propping up the banks, as it is as a lender to the Government.

No country willingly wants to have outside forces dictate how it is governed. Now that such a sorry state of affairs has come to past, the best way to deal with it is to listen and learn rather than bitch and gripe.

By the time they eventually leave us to our own devises, some much-needed reform will have been undertaken. It is up to the country, then, to continue in the same vein.

The only pity is that the bailout boys have little power to demand effective change in the political culture. For without such change, the chances remain high that future governments will be as likely to make a hames of the country in the same manner that past ones have.