In our greed for ideology, we gorged on light-touch regulation
The tapes are deeply depressing, even disgusting. They betray no shame whatever, no hint that the people involved feel they have let others down.
Yet, they let down their customers, their shareholders, the wider community. They let down their own boards. There’s no acknowledgment of that. Nowhere do you hear any of the people involved saying ‘we got it wrong, we’ve screwed up’.
At the weekend, David Drumm said that he wasn’t prepared to be a scapegoat any more. My reaction was ‘easy for him to say, from his nice pad, thousands of miles away’. He hasn’t exactly hung around to face the music, has he?
On reflection, though, Drumm is pointing us at a more fundamental question. Since reportage of the ‘Anglo tapes’ began, we’ve become fascinated with the culture they reveal. The bragging tones, the contempt for authority, the sneering. That, we’ve decided, was the culture of banking, and that culture got us into this mess.
But it wasn’t a macho, nasty culture that destroyed Ireland. It was ideology.
We don’t like to talk about ideology. We don’t measure our politics that way. Irish politics, since the foundation of the State, has been resolutely non-ideological. Sure, we might have hated Fianna Fáil or Fine Gael, all our lives. We might have been dismissive of Labour, Sinn Féin, or any of the other smaller parties that have come and gone. But never on ideological grounds. At least, never on economically ideological grounds.
The ideologies of the Civil War, as blurred as they might be now, determined the course of Irish politics for generations. Gradually, they were replaced by other issues.
It’s not what you know in Irish politics, it’s who you know. We vote for personalities. In general elections, our strongest motivation in the last 30 years has been to kick out the people who made a mess — not to change the value system that underpins our politics.
And yet, it was a particular and special kind of ideology that built the house of cards otherwise known as the Celtic Tiger. That ideology has been replaced by an attempt at better management, known as austerity.
But there’s a problem with austerity. It dawned on me recently that I admire austerity. Some of my life-long heroes were austere. But they practised austerity, they didn’t impose it. When there isn’t a true, genuine, shared austerity, for a higher purpose, the only result of imposing it is that everyone feels let down and damaged.
It’s impossible to see it as necessary, or as capable of yielding good outcomes, if it’s accompanied by lecturing or self-congratulatory tones.
But we need to talk about the ideology that destroyed us, because if we don’t learn that lesson, we will repeat the same mistakes, over and over again.
When he stood up to deliver his first Budget speech, in December, 1997, Charlie McCreevy began by saying: “Ireland has, in this decade, undergone an economic transformation.
“I would like to acknowledge the contribution that my predecessors in this office have made in that period ... Irish society has joined together over that decade to forge, and sustain, a coherent and consistent strategy for economic and social progress ... In that period, the numbers at work have increased by over a quarter of a million. Our public finances are in much better shape.”
That was the last time, in all his years in office, that McCreevy acknowledged that he had inherited a strongly growing economy that had been carefully managed out of debt, and difficulty, by his predecessor, Ruairi Quinn.
In his first budget, McCreevy halved capital gains tax, reduced the top rate of tax by two per cent, and began the first of an endless series of tax breaks for builders.
Private nursing homes and three-star hotels were the beneficiaries of that first budget, and they were followed by dozens of others — sports-injury clinics, seaside towns, car parks, student accommodation. Whatever could be built, Charlie gave it a tax break, and threw in a few bob more (a couple of hundred million, actually) for better prize-money at the races, not to mention the super-duper vanity projects.
And the SSIAs — remember them? In the end, we spent £14bn on the ultimate tax break for middle-class savers, while the government was busy privatising strategic utilities (broadband, for instance) and doing its damndest to privatise the health service.
If that £14bn, and the rest, hadn’t been spent then, would we still have had high economic growth? Yes, we would.
Would we have become dependent on a property and banking bubble? No, we wouldn’t.
But the most revealing words were in a speech McCreevy made after he left the office of Minister for Finance and went off to Europe to an even more highly-paid job. Speaking in 2005, he looked back at his success.
“As Finance Minister in Ireland, I saw what great entrepreneurial energies that a ‘light-touch’ regulatory system can unleash ... Economic freedom through low taxes, open borders, good corporate governance and light-touch regulation have been absolutely indispensable to the scale of the success we have seen.”
WE KNOW now what was unleashed by light-touch regulation. It may have started as a drive for more growth, but economic policy throughout those years was increasingly geared to doing only two things — promoting greed and winning elections.
I’ve written here, before, about how the elections of 2002 and 2007 were effectively bought with Exchequer funds — the SSIAs in 2007, and massive, back-dated increases in child benefit, paid out 10 days before the election of 2002. The real Fianna Fáil/PD miracle of the time was that they got away with so much.
Of course, a culture of greed and arrogance was bound to emerge. Of course, regulators were bound to be treated with contempt — that was, in effect, what they were there for.
Of course, individuals were bound to develop a sense of invincibility and unbridled arrogance.
But what we need to remember — what we can never forget — is that none of that happened spontaneously. It was led by a blinkered and pernicious ideology, accompanied by the shameless use of national resources for political gain.
That did immense damage.
The government trying to repair that damage might be punished. Perhaps they haven’t displayed sufficient vision and imagination to escape that punishment. But if we forgive and forget the role of ideology in shaping our destiny in the past, it will return to haunt us again in the future. That would be the ultimate disaster.
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