Saturday, 28 June 2014

Brian Crowley and Micheál Martin: A Tale of Mice and Men

The story that provides perhaps the best summation of the loyalty upon which Fianna Fáil leaders could traditionally rely revolves, predictably enough, around Charles Haughey's press secretary, the voluble PJ Mara. During one of the many leadership heaves endured and survived by his boss, Mara told assembled members of the press that his party was run on the principle of "uno duce, una voce", before adding in a rather less elegant vernacular: "In other words, there'll be no more nibbling at my leader's bum." Haughey, a man with an ability to project an image of erudition that was never quite matched by reality, later asked Mara about the meaning and provenance of  his Italian soundbite. He was reputedly delighted at the sentiment "one leader, one voice", but less than amused to hear that it had originated with Mussolini.

As he contemplates the loss of his party's last remaining MEP, Brian Crowley, Micheál Martin must think ruefully of the lost age of obedient discipline that once characterised the Soldiers of Destiny, a discipline which often bordered on sycophancy. It was a discipline which served Jack Lynch well in one of the party's few moments of genuine insurrection at the notorious Ard Fheis of 1971, when Paddy Hillery bellowed at the rebellious supporters of Kevin Boland's hardline stance on the Northern question: "Ye can have Boland but ye can’t have Fianna Fáil!" His battle cry was prescient. Amazingly, of the vast parliamentary party elected in 1969, only three TDs (Neil Blaney, the aforementioned Kevin Boland and Sean Sherwin) left the party over its abandonment of one of the core pillars of its ideology. This same discipline served Haughey time and time again until Sean Doherty served up one scandal too many, it allowed Bertie Ahern to survive his Manchester misadventures and it took the collapse of the economy and the phenomenal political ineptitude of Brian Cowen to cause it to falter. Today it lies in ruins. 

For three years, the signs have been there that Martin's authority over his party was a pale shadow of what his chieftain predecessors had enjoyed - the open and unpunished shape throwing of John McGuinness, the refusal of deputy leader Eamon O'Cuiv to support the European Fiscal Treaty and the dissent of the majority of his parliamentary party from his support for the Protection of Life during Pregnancy Bill being good illustrations. However, with the departure of Brian Crowley from the integrationist Alliance of Liberals and Democrats for Europe (ALDE) Group in the European Parliament for the Eurosceptic Alliance of European Conservatives and Reformists (ECR), one gets the sense that a Rubicon has been crossed. 

For better or worse, political dynamics have dictated that the decision as to which European grouping to join in Brussels has been made by party leaderships (with or without consulting their members) and not merely by MEPs themselves. This is to be expected, in circumstances where group affiliation in parliament reflects the broader system of alliances between national parties and governments at the level of the European Council and a projection to electorates back home (to the extent to which they care) of what the party's philosophy is. It is, to my knowledge, without precedent (in any European party, let alone one like Fianna Fáil), that an MEP would take it upon himself to make the leadership's choice for it by unilaterally electing to leave one grouping for another.

However, this is now the Realpolitik of today's Fianna Fáil. The national organisation failed to bring Mary Fitzpatrick or Pat "the Cope" Gallagher over the line in the other two Euro-constituencies and Brian Crowley, who has topped the poll in every election since he was first returned in 1994, will have been acutely aware that so hugely does his brand tower over that of his party in his Munster heartland, that a decision to run as an independent would almost certainly have resulted in Fianna Fáil having no MEP at all. In these circumstances, Crowley appears to have calculated that his social conservatism and his Euroscepticism, which he has hardly kept secret in the twenty one years since Albert Reynolds nominated him to the Senate, could not realistically be ignored and deprecated by party high command any longer. His ultimatum to Micheál Martin was a win-win in these circumstances: "Back me or sack me, because I win either way."

Martin's heedless bravura, in first refusing to address Crowley's concerns about the deficit between his constituents' views on the European project and those of the ALDE group, his arrogant hubris in failing to appreciate Crowley's comparative advantage in bargaining power and his sanctimonious braggadocio, in expelling Crowley from the parliamentary party and delivering cringe-inducing bromides about Fianna Fáil's commitment to the European project indicate a number of things. One, of course, is the complete failure on Martin's part to capitalise on his (in the circumstances, very impressive) local election performance, to enhance his electoral brand. Another is the extent to which the party has devolved into a fractious confederacy of regional fiefdoms whose loyalty to local capos exceeds that owed to the party leadership. Still another is the gap between Fianna Fáil's continued ability to manage a national campaigning machine (which remains formidable) and its ability to manage the news cycle (which is even worse than it was when the IMF came to town in late 2010, which says something).

However, as usual, the bigger point is being missed. Having been given an object lesson in his own impotence by Brian Crowley's audacious insubordination, Micheál Martin has chosen to face his predicament, not with a realism that befits a man in his tenuous position, but with a resigned act of selfless self-sacrifice. The rebellious Crowley handed Martin an unbidden opportunity to hitch his party's wagon to an ascendent tendency within the electorate which has yet to find expression or representation amongst parties more grown-up and responsible than Sinn Fein - namely, the growing vein of resentment at a European Union whose disastrously ill-conceived single currency helped to turn our economy into a leveraged property fund, whose regulations stifle our ability to build a viable export industrial base, whose penchant for bailouts prevents a rational resolution of the Greenspan-Duisenberg-era banking difficulties which came to a head in 2008 and whose continued advocacy of tax harmonisation and financial transaction taxes threatens both our 12.5% tax rate and our pivotally important financial services export sector.

To grasp the nettle that Crowley handed to him would have entailed plenty of risk but would also have allowed Martin the potential to out-flank the increasingly hapless looking Fine Gael, whilst providing Sinn Fein and independent voters with a more economically and fiscally realistic alternative to fealty to Brussels. However, Martin's political instincts and his party's are not hardwired that way. To be clinical and sensible, they must be elitist and to be populist, they must be hot-headed and unrealistic. The idea of a hard-headed and coolly calibrated exploitation of populism seems to be alien to their thinking. Moreover, Martin and his cohort show every sign of being both unwilling and unable to question any aspect of the European Union and its integrationist project, loyalty to which has become a de facto religion for Ireland's governmental class, which seems to equate any opposition to Jean Monet's brainchild with opposition to civilisation itself. 

Martin's decision to shoot himself and his party in the foot demonstrates how depressingly deep the roots of that loyalty lie, with one of the most electorally ruthless parties in the history of democracy taking one for Team-Europe with no obvious signs of dissent at any level of the organisation. Martin has instead decided to maintain his existing strategy of sniping irresponsibly at the government's necessary fiscal adjustments, all the while continuing to back up Fine Gael and Labour's uncritical support for every policy that emerges from the Brussels high command - depressingly uninspiring stuff. However, Mr Crowley, whose contributions to Irish public life have hitherto been limited has, in showing a level of vision singularly lacking in his former boss, provided some hint that it is possible for dissent to emerge from the traditional repositories of governmental responsibility. Maybe something will snap, maybe...

Sunday, 22 June 2014

The Generic Irish Coalition v. Club Med: Part III

(See The Generic Irish Coalition v. Club Med: Part I and Part II)

As we have seen, the size of the Generic Irish Coalition or GIC (Fianna Fail, Fine Gael, Labour and the Greens, together with associated gene-pool independents), representing the Northern European fundamentals of Ireland's political and institutional culture, has declined from 94% of the vote in  1982, to what I have estimated to be roughly 65% today, with the Mediterranean Coalition or Club Med (Sinn Fein et al), a coalition representing the political aspirations of Ireland's culturally Southern European social periphery, having moved during this period from almost negligible support to being able to call upon an aggregate of roughly a third of the electorate. The 32-year story is dramatic enough, representing an average loss of support for the GIC parties amounting to a little under 1% a year. What makes it even more discomfiting is that as recently as 2007, the GIC vote (if one includes gene pool independents and the now defunct Progressive Democrats) exceeded 86%, meaning that more than two thirds of the GIC slump has taken place in the last seven years.

Like most quantum leaps of political catastrophe, the GIC implosion represents not the dramatic depression-induced spasm of uncontrollable rage against the machine described by the purveyors of conventional wisdom, but the logical consequence of decades of public policy which has entailed the GIC digging its own political grave in order to advance what Ronald Reagan called the temporary convenience of today.

The story goes right back to 1959, when Sean Lemass uttered the famous words: "Let's get cracking!" And get cracking he did. In a mere seven years, Lemass took Ireland out of her self-imposed exile from the global economy, lifting controls over imports and foreign capital and tearing down tariff walls. The economic benefits of this breath of fresh air can hardly be gainsaid. However, Ireland's political and economic isolation had had some positive unintended consequences - principally, our insulation from a variety of intellectual fads which were sweeping through the rest of the Western world in the mid-twentieth century. With the end of our exile, Lemass' innate conservatism was insufficient to prevent Ireland from being infected with the twentieth century's disastrous infatuation with social engineering. By 1966, Lemass himself was gone and his Fine Gael counterpart, the redoubtable James Dillon along with him and with those men departed the last vestiges of Pre-War restraint.
  
The big failures of the GIC are best understood by reference to what I call the three Ls: Land, Labour and Local Government.

Land: 

Ireland's independence struggle was at all stages heavily intertwined with land ownership policy with the twinning of the Land League and Home Rule movements in the 1880s. Ireland's land agitation movement always needed to deal with an underlying tension between those who wished to create a broader-based indigenous landowning class like Arthur Griffith and those who regarded the private ownership of land as a self-evidently anti-social activity like Michael Davitt. This tension could be managed with relative ease for so long as there was an absentee landlord class to act as a unifying external bogeyman. 

However, by the mid-twentieth century, the absentee landlords were long gone and the country's politics came to reflect a tense mediation of conflict between largely urban anti-landlord progressives, who saw Irish independence as forming part of an international struggle against private land ownership and largely rural conservatives, who saw the role of an independent Irish nation as being the creation of a large land-owning middle class. Labour was the party best representing the progressive strain and became the least successful of Ireland's Big Three parties. Fine Gael best represented the conservative strain and became the perpetual runner-up party. Fianna Fail, which combined aspects of progressive coachwork (e.g compulsory tillage and anti-ranching laws) on top of a fundamentally conservative chassis became the most successful party in Ireland, bar-none.

Post-de Valera Ireland decided to square the circle by regulating land ownership (in order to appease progressives) and subsidising it (to appease conservatives). The results have been disastrous. 

The Planning and Development Act 1963 effectively gave central and local government control over the use of private land, introducing cumbersome central planning to the Irish economy and artificially raising the market value of development land. At the same time, the Landlord and Tenant Acts raised the regulatory burden for landlords, reduced the supply of rental accommodation and increased its cost. After the collapse of Bretton-Woods in 1971, the constant juicing of land and real estate markets by Central Banks has had the double-whammy effect of making housing ruinously expensive and making its value inherently unstable, with boom and bust cycles creating long periods of unaffordability followed by compensatory cycles of debt deflation - and joining the euro only made this worse. Add the costs associated with a plethora of regulations in the construction industry and what we see is an emerging trend of declining affordability of family formation for those who don't qualify for housing subsidy.

As if all of this wasn't bad enough, while income taxes inexorably rose throughout the 1970s and 1980s and Ireland's productive classes were hit with taxes on corporate profits, capital gains, gifts, inheritances and deposit interest, land ownership remained strangely immune from the Irish government's desire to tax everything that moved. Worse still, the Irish government used schemes like the notorious "section 23 relief" to positively incentivise real estate investment over and above other industrial sectors.

Labour:

Historians in decades to come will record with the greatest degree of perplexity that a political establishment that was so keen to valorise the role of labour in wealth creation (and one of whose parties went so far as to name itself after this element of the productive process) sought to (a) fund its operations primarily through the taxation of work and the savings and investment processes that create that work; and (b) add thousands of pages of regulatory code to the statute book, making the creation of jobs more expensive, more risky and less profitable. And yet, if it had been the intention of our political establishment to create as few jobs and as much unemployment as possible, they could hardly have done a better job.  

On taxation, our system defies rational explanation. After an aborted attempt in the 1980s and 90s to levy a tax on residential property, such was the power of the land owning lobby in Ireland that the tax was dropped (and by a Labour Finance Minister no less). We have no tax on site or land value - i.e. no tax on the unproductive activity of land ownership. At the same time, we now have a marginal tax rate on income adding up to 52% - this is an improvement on the nadir point in the 1970s when this rate rose to 77%. Nonetheless, how is it rational to tax something that you are trying to encourage? 


Meanwhile, our system of labour and employment regulation has ramped up in its scope and complexity since the early 1970s. When one looks at the Labour market, it structurally favours the highest skilled (whose skills are scarcest), the smartest (who have the greatest ability to obtain those skills), the healthiest (whose productivity is highest and absenteeism lowest) and the most behaviourally disciplined (who have the best employment records). Our system of wage and employment termination controls have the effect of dramatically increasing the labour market disadvantages suffered by the least skilled, the least smart, the weakest and the least behaviourally disciplined. The rickety superstructure of employment laws which have been introduced in the last fifty years amounts to a declaration of war against the employability of those who have the wrong characteristics. The lower skilled and those with the sketchiest employment records are being regulated out of the job market and being denied access to the experience they need to obtain skills. Surely we could have done better than this.

Local Government:

Our fundamentally irrational land and labour policies have been accompanied by a trend that goes back to the creation of the County Manager system of local government in the 1920s and 30s, which has been to centralise government and to have taxes levied and monies doled out and allocated on a national rather than local basis. This evolution in national government culminated in the decision by Jack Lynch in 1977 to abolish local authority rates, thereby effectively turning county councils into de facto local branches of the Department of the Environment and Local Government.

At the same time, services such as buses, light rail and schools, which ought to have been local government responsibilities, have been undertaken by national government. This has increased the tendency of local electorates to vote themselves larger and larger slices of nationally allocated pies and for the budgetary process to become a disorderly auctioneering exercise, with benefits being privatised by local interest groups and costs being socialised to the national treasury. 

There is no better illustration of this dynamic than the corrupt County Dublin planning processes that proliferated in the 1980s and 90s. Local authorities were given the power to determine who got to build what and where. In an atmosphere in which landowners could enjoy artificial government-induced zoning windfalls, where developers could construct developments of dubious commercial viability, where county councillors could effectively sell their votes to the highest bidder and the cost of providing subsidised schools, sanitation, transportation services and the like was picked up by the central government, it should have been no surprise when the disasters of 1980s planning inflicted themselves on the suburban Dublin. This is what happens when localities are not responsible for raising their own monies and funding their own services.

The Combined Effects:

The combined effect of the failure of our political establishment in relation to the three Ls has been to overburden the middle and entrepreneurial classes with tax burdens that hinder both capital formation and family formation, whilst hugely enriching a wealthy realty owning elite, all the while distorting the economy and diverting resources away from wealth creation and towards the chain selling of land and buildings. At the same time, rising land and realty costs have further weakened the ability of the middle classes to save, invest and form households.


Meanwhile, an increasingly large portion of the population has been reduced to a form of mendicancy, either locked out of the labour market and reliant upon welfare benefits, or working but reliant on housing subsidies, many of which amount to little more than a means to funnel monies into the pockets of the very landlords who are being targetted by our landlord and tenant laws. It is this mendicant portion of the population which has formed the basis behind the Club Med's political ascent. In the next part of this series, I will look at concrete political steps that the GIC parties can take to reverse these worrying trends.

Monday, 16 June 2014

The Banking Inquiry: The Official Scandal and the Real One

Unsurprisingly, given the ham-fisted inelegance for which our political and media elites have become so justly renowned, the commencement of our long-awaited banking inquiry has been accompanied by a cacophony of tragicomic incompetence, which, in its own farcical way, well befits a process conceived in a spirit of hapless and evasive myopia, by an establishment still clueless as to the nature of facts that have been staring it in the face for more than half a decade.

The imbroglio has confirmed a number of things, which the media has picked up on quite well.

The first is that the deftness of Enda Kenny's political touch continues to deteriorate. His decision to initiate the inquiry in the first place had the "all sizzle and no steak" fingerprints of Yes Minister's Jim Hacker all over it. Having decided to press ahead with the inquiry, he chose the most ineffective method of conducting it, namely a parliamentary investigation, and then, having done that, he attempted to float on a cloud of de-politicised superiority, before, effectively, admitting that he wanted his own side to have a majority on the empanelled committee so that the terms of reference could be indirectly controlled by his office.

The second is Fianna Fail's remarkable ability to play a weak hand strongly - whatever good it ultimately does them. By rowing in behind an inquiry that they would undoubtedly rather not have had, and by managing to roll out a disciplined series of criticisms (it should have been a judicial inquiry; it should have broad terms of reference to cover post 2011 events, etc), they have managed to highlight the government's imperious and arrogant tendencies - a good strategy in circumstances in which making the other side look bad is the closest one can come to looking good.

The third is the extent to which the Labour Party is being run like the Fitzwilliam Lawn Tennis Club, with its Seanad leadership positions being allocated to the poshest Senators - Leader Ivana Bacik and Whip, Susan O'Keeffe - not the most politically adept. The former has now run in the Dublin Euro Constituency, in flinty, downmarket Dublin Central and in white bread Dun Laoghaire and failed to be elected in all three. O'Keeffe has run in Sligo, where Labour won a seat in 1992, and managed (on a day when Labour won 37 seats) to come fourth behind FG, FF and Sinn Fein. However, such is the Labour Party's obsession with the notion that there is some untapped market for ermine-clad polenta socialism among the plain folk of Ireland that they ignored the need for actual political and organisational skills in their Seanad top brass. The failure of Labour to properly whip its members and O'Keeffe's bizarre non-attendance of her first committee meeting due to her daughter's Leaving Cert both vividly demonstrate the mess facing whoever is unlucky enough to win that hapless party's leadership contest.
 
As usual though, the most fundamental question remains unaddressed. Why are we having a banking inquiry in the first place? After all, the real facts of the 2008 crash have already been well ventilated. Our political establishment heedlessly committed us to joining the euro. Interest rates, already heavily repressed in a failed attempt to reflate Germany's soggy post-reunification economy, went into subprime territory in order to follow Alan Greenspan's Fed down the always doomed road of economic growth by currency debasement. The result in Ireland was a convoy of desperate bond buyers ferally attempting to garner a few extra bips of yield flooding our banks with more money than they knew what to do with. The banks then lent vast amounts of money into the real estate market, believing this to be safe because of the ever rising value of the collateral secured against their loans. Not till too late did they realise that the rising collateral values underpinning their lending strategies were not the antiseptic consequence of demographic trends but a direct consequence of their lending. Hence, once their loan books ceased to grow, the collateral pools stagnated and once the loans secured by the collateral started to default, the value of said collateral evaporated almost overnight. The resulting crash revealed an economy reliant on asset bubbles to grow and an international political establishment which was completely unwilling to subject its banks or its sovereign debt to the unforgiving judgements of the market, one of the many consequences of which was the 2008 CIFS Bank Guarantee. We know all of these things - and those who don't need little more than Google to find them out. We do not need an expensive boondoggle inquiry (especially one run by politicians) to do so.

Does this mean that corporate governance in Irish banks was not sorely lacking? Of course not, but the reckless idiosyncrasies of Ireland's bank management are unlikely to represent anything other than a consequence of the dysfunctional yield-curve management of the ECB between 2002 and 2008. Where monetary expansions create a temporary ability to make reckless decisions without pain, it should be no surprise when risk management systems begin to atrophy or to disappear altogether. Were laws broken? Probably. But we know that the tools were available to the bankers to make a pig's breakfast of their institutions perfectly legally, with or without the breaking or bending of rules. In any event, the answer to illegality is not to have a public inquiry, but for a private investigation to be commenced by the Gardai, the investigative unit of the Central Bank and the Director of Public Prosecutions. If these investigations yield insufficient evidence to ground prosecutions, then the authorities have no business smearing people's reputations and subjecting them to public odium and potential physical insecurity by spilling the beans in public. If there is sufficient evidence, what should follow is not an Oireachtas dog and pony show but actual prosecutions. An Oireachtas inquiry does not (and, moreover, should not) have the authority to hold malfeasors to account and runs the simultaneous risk of unleashing bouts of constitutionally dubious McCarthyesque demagoguery.

The findings of the inquiry will be circumscribed by the terms of reference that the committee chooses. Fianna Fail will want to share the embarrassment by examining the period leading up to Ireland's bailout exit. The government will want (and presumably get) a narrower time period designed to heap embarrassment on the Fianna Fail rogue's gallery that was so humiliated back in 2011. However, even this issue is secondary. Consider the following. Will the inquiry tell us when the decision was privately made to join the euro (i.e. was it before or after any of the economic consequences were capable of being considered?)? Will it tell us whether civil servants, central bankers or politicians privately assured the Germans and French etc of our guaranteed involvement in the euro even as the issue was officially being debated in public? Will it tell us what (if any) discussions occurred in relation to inflationary and other macroeconomic consequences of joining the euro? Will it tell us what discussions occurred in relation to the macro-prudential policies which might have been used to substitute for the loss of the Central Bank's interest rate setting policies? Will it tell us whether there was any discussion of the fact that we were one of the few countries which did not have to fudge the Maastricht convergence criteria in order to get into the euro? Will it tell us whether any Irish official expressed concern in relation to the membership of the Italians and the Greeks despite their obvious fiscal unsuitability? Will it tell us whether Irish government officials knew about communications and private agreements between ECB, Bank of England, Fed etc officials in relation to monetary coordination? The answer to each of these questions is a flat no. Even if the inquiry had the power or remit to look into these matters, would it tell us things we don't, fundamentally, already know? Even the answer to that question is probably no. In the end, the broad brush truth about the 2000s is much more interesting than the specific detail.

The institution of this inquiry ultimately shows that six years on from the crash, our politicians (nationally and internationally) are committed to the same reckless fiscal and monetary policies that caused the 2008 crash in the first place. Hence, they have decided in advance that the bubble was inflated by the banks with the collaboration of regulators, that a small number of bank executives and officials will carry the can for what happened and that instead of having a root and branch reform of national treasuries and central banking systems, we will instead have a star chamber whose main product will be a report recommending new regulations and compliance codes which will do nothing to prevent the next crisis and the one after that. Set against this grim reality, the scandals du jour really do seem rather insignificant - which, I suspect, is why they're in the news in the first place.     

Wednesday, 11 June 2014

The Generic Irish Coalition v. Club Med: Part II


A number of interesting patterns emerge from an examination of the voter bases of the Generic Irish Coalition (or GIC) and the Mediterranean Coalition (aka Club Med).

The first crucial observation is spacial/geographic. The Generic Irish Coalition is most prevalent in the countryside, the exurbs and the suburbs. Club Med voters cluster into the cities and the towns.

The second is regional. The poorest regions in the country (i.e. the most rural/agricultural) voted for the GIC, whilst the wealthiest (i.e. the most urban) voted for the Club Med.parties. However, this is only a small part of the story. Within the poorer regions, the wealthier countryside voters voted most heavily for the GIC (most notably Fianna Fail and Fine Gael), whilst the poorer townies voted more heavily for Club Med Parties. In the wealthier regions, the same sort of pattern held, with the wealthier suburbanites voting GIC and the poorer inner city dwellers voting Club Med.

When broken down, the GIC did best in the wealthiest parts of the poorest regions and Club Med did best in the poorest parts of the wealthiest regions. Interestingly, the poorer parts of the poorer regions, whilst swinging quite heavily to Club Med, stuck with GIC to a greater degree than their city counterparts (more on that later).

Thirdly, the Club Med swing was most pronounced in areas with higher income/wealth inequality (e.g. Dublin), whilst the GIC held its own better in the regional towns where inequality tends to be lower. What this correlation implies is a good question. One speculates that disparities in wealth and income might perhaps be more galling to a voter in Sallynoggin who lives minutes away from stucco seafront mansions in Monkstown than to a local authority tenant in Nenagh whose experience of wealth disparity is more likely to revolve around the Avensis-driving principal of the local VEC school.

There were interesting changes amongst individual parties. In 2011, Fine Gael won the countryside, the suburbs and the exurbs by a country mile. Fianna Fail were a distant second in the countryside, Labour a distant second in the suburbs and  the exurbs. Labour was the dominant city party with Fine Gael a close second and Fianna Fail annihilated. Sinn Fein performed credibly (if rather tepidly) across the board - but notably poorly in the suburbs.

In 2014, Fianna Fail regained its top spot as the rural party with Fine Gael a close second. Fine Gael won the suburbs and exurbs with Fianna Fail not far behind. Sinn Fein won the city vote by a wide margin. Labour were annihilated everywhere except in the suburbs, where they still dropped to third spot.

I think though that the most meaningful correlations are as follows:
  1. Land Acreage: The lower the population density and the higher the per capita land space occupied per household, the higher the GIC vote. Conversely, the Club Med vote was highest in the places with the highest population density and the lowest level of land space occupied per household. This might be a better explanation than the inequality meme for why the regional townies (who occupy more land per household than Inner city folk) were more likely to stick with GIC.
  2. Housing Affordability: In areas with expensive residential real estate (measured by reference to rents and home prices) relative to median individual and household incomes, the Club Med parties gained their biggest shares of the vote. By contrast, in places with higher median incomes relative to housing costs, the GIC did best. For example, median earnings in the countryside are low, but so are rents and house prices. Similarly, while housing is expensive in the suburbs, median incomes are high. By contrast, in the inner city of Dublin, a modest apartment will often set a buyer back more than  €200,000 and it is not atypical for the rent on a one-bedroom apartment to exceed €1,000 per month. Meanwhile, the median income of inner city households is quite low. Corollary: More affordable housing = More GIC voters. Less Affordable Housing = More Club Med voters. This most likely applies to costs of living in general, house prices being a good proxy for the cost of living in a given locality.
  3. Immigrant Populations: The areas in which immigrant populations are lowest stuck with the GIC to the greatest degree. Immigrant populations cluster in regional towns (for instance around the tourism and hotel trades), where there is more rental housing than in the neighbouring rural areas. In the metropolitan areas, immigrants tend to be priced out of the more expensive suburban areas and to concentrate in the inner cities and the cheaper suburbs.
  4. Family Status: GIC support is highest where marriage and households with children are most predominant, whereas Club Med support is highest in areas with more single person households and non-marital family units. 
We can thus infer that the typical GIC voter (correcting for age) is married, has children, lives in a single-family residential unit, receives no housing subsidy (i.e. social/affordable housing or rent allowance) and is unlikely to have a significant number of immigrant neighbours or work colleagues.

Conversely, the archetypal Club Med voter is unmarried, lives in an apartment or in a high density housing estate, has significant numbers of immigrant neighbours, competes with immigrant workers in the labour market and  is more likely than the equivalent GIC voter to be in receipt of some form of housing subsidy.

For the GIC parties (Fine Gael, Fianna Fail, Labour, the Greens), this demographic divergence leads to several key questions:
  1. What are the short-term dangers of continued Club Med ascendance? In the short term, not many. Club Med is extremely diffuse, incoherent and internecine (look, for instance, at how quickly the United Left disintegrated after their 2011 breakthrough). Their diffusion is too great for them to obtain optimum seat numbers, with their largest constituent party (Sinn Fein) having 15% of the vote. Given the internal sectarianism of Club Med, it would need 55% or more for one of its constituent parties to lead a government. If one of the parties (most likely Sinn Fein) enters government, the experience will probably be a lot like the fabled last journey journey on the Titanic - exciting for a while but rather gurgley at the end. The real danger for the GIC (and its voters) is that a shrinking GIC base makes wider ranging (and thus more ideologically incoherent) alliances necessary to form governments. 
  2. What are the long term dangers? Obviously enough, a Club Med government. More likely is the permanent ratification of incoherent right-left coalitions which can achieve little other than to keep Club Med out of power. These types of arrangement deepen the existing problem of civil service-run government, as government policy increasingly has to be mediated on a "split the difference" basis.
  3. What can be done in the short term to arrest the decline? Not a great deal. The fiscal constraints associated with Ireland's current governance limit the ability to make decisions that are popular in the short term. The first short term objective is to hold the existing GIC vote. For each of the existing GIC parties, the biggest opportunity lies in consolidating the share of the existing GIC vote. This is not a strategy without potential. Remember that in today's fragmented political system, earning a mere two thirds of the GIC vote (about 42-45%) represents an overall majority. In my fourth and final post on this topic, I'll look at the more elusive goal of pealing off Club Med voters.
  4. What are the long term strategies? For the GIC parties, the key to the future is to adopt public policy with a view to maximising the size of the Generic Irish vote (i.e. the current coalition of suburban, exurban and rural voters currently voting for GIC parties). Policies which assist in perpetuating the growth of this coalition of voters will provide huge first-mover advantage to whichever party (and that includes the still nascent Reform Alliance) initiates them.
My next post will suggest the type of policy positions which will encourage the growth of this coalition of voters, so please stay tuned.



Saturday, 7 June 2014

The Generic Irish Coalition v. Club Med: Part I

My previous posts have understandably been dominated by the plight of the Labour Party, given its leadership travails. It doesn't look as if Labour will produce any newsworthy data points this side of the leadership ballot, so the next few posts will be devoted to the broader demographics of Election 2014 and what the country's political mainstream can do about surviving and potentially profiting from the structural trends that it has thrown forth. 

Election 2014 has continued a structural trend that can be traced back to the 2009 local and European elections, of the electorate bifurcating into two distinct coalitions of voters. The emerging divide is not cleanly left-right, nor is it Catholic-Protestant. It is not secular-religious. There is no gender gap that I can clearly discern. It is not, strictly speaking, correct to describe it as pro austerity-anti austerity - although this battle has been a catalyst. The divide is more demographic than regional, inasmuch as it appears to exist in every region. However, in each region, it appears to follow roughly the same demographic pattern.

Since 1922, Ireland has elected parties and politicians reflective of the generic characteristics of the country. At independence, Ireland was a country much like Australia or New Zealand - English speaking, sparsely populated, agrarian and upper-middle income (i.e. poorer than the more industrialised countries but much richer than the third world). The key demographic difference between Ireland and the Anzacs was that the population was majority Catholic and not Protestant. Like Australia, we produced a three-stripe political spectrum consisting of:
  1. a Tory Party (Fine Gael in Ireland, the Liberals in Australia);
  2. a rural conservative nationalist party (Fianna Fail in Ireland, the Country Party in Australia); and
  3. a social democratic party (Labour in Ireland, Labor in Australia).
Anglo Fabian-ism, whether its impeccably secular adherents wish to acknowledge it or not, is largely a Non-Conformist Protestant phenomenon, hence Irish Labour has always been a much weaker political force than Australian Labor. Tory-ism has flourished most where there is a large Anglican population, hence the failure of Fine Gael to enjoy the type of dominance attained by Sir Robert Menzies' Liberals in Australia. Meanwhile, agrarian conservative nationalism has been a much more powerful motivator of Anglo Catholics than of Anglo Protestants, hence Fianna Fail became the Party of God in Ireland, while the County Party became a rural fringe organisation in Australia. 

These parties formed the basis behind the Irish political status quo which holds to this day. Every government since 1932 has contained at least one of the above three parties. Even the smaller parties of government that have come and gone over the years have been variants of the big three. The Farmers' Party was a rustic Fine Gael. The Progressive Democrats were a patrician Fine Gael. Clann na Poblachta was an intellectually snobbish and ideological Fianna Fail. National Labour was a more Catholic version of the Labour Party. The Greens were (and still are) a more patrician Labour Party. Democratic Left/the Workers' Party  are the outlier, inasmuch as they started out on the political peripheries, but had evolved into a Labour facsimile by the time they entered government.

Hence the real political divide in Ireland. There are four existing political parties in Ireland which have served in government and which, between them, still hold the majority of support: Fianna Fail, Fine Gael, Labour and the Greens.  If one adds together the support of Fine Gael, Fianna Fail and Labour in the November 1982 General Election, the total support was a staggering 93.8% of the vote. Add the Ecologist Party (the forerunner of the Greens) and that becomes 94%. If one then treats the 3.3% that the Workers' Party attained in that election as de facto Labour (perhaps dubious), that number climbs to 97.3%. What did this dominance reflect? The answer is that it reflected Ireland's status as essentially being a Northern European Country with fairly straightforward Northern European aspirations - industrial, commercial, financial. Our per capita income made us look more Southern European than we truly were. The strain of Southern European thinking in the Irish political psyche expressed itself mainly through Fianna Fail, a party which is basically a Northern European conservative party with, historically speaking, a dollop of Southern European Catholic Socialism mixed in. Taking these parties together, one could call the combination the Generic Irish Coalition - i.e. reflective, in fundamental terms, of the nation's core characteristics and tendencies.

Keeping the 94% number from 1982 in mind, the May 2014 strength of the Generic Irish Coalition amounted to a combined 59%. This probably understates likely general election support. Counting gene pool independents and local independent votes which revert to parties at general elections, I would estimate the Generic Irish Coalition as constituting roughly 65% of the electorate - catastrophically down relative to 1982 but still an overwhelming majority, and most of it still cohering around two substantial parties holding roughly a quarter of the vote each.

As against this, roughly 35% of the electorate voted for parties which have never served in government. For reasons I'll explain later, I call this the Mediterranean Coalition -  or Club Med for short. Club Med's voter numbers, beyond the hype, are 30 points behind the Generic Irish Coalition's. Even if it could cohere into a single bloc (which it can't), it could not govern without the numbers of the Generic Irish Coalition. It is fragmented. The only subset of Club Med that is of substantial size is Sinn Fein, with 15% or so of the vote. The rest are scattered and have either no national brand, like the independents or a weak one, like the United Left. Club Med is also heterogeneous, spanning from the Socialist Party, who will do business with nobody, to Sinn Fein who, seemingly, will do business with anybody. It is doubtful that more than about two thirds of their votes could cohere around a single party or alliance.

Looked at in isolation, the Generic Irish Coalition looks like an electorate in South Eastern England, Southern Germany, Austria, Switzerland, Northern Italy, Holland or Flanders - namely, with a moderate to strong work ethic, high levels of workforce participation, moderate to high levels of entrepreneurship, moderate to high savings rates, skilled, productive and politically small "c" conservative. 

For decades, the Generic Irish Coalition dominated the electoral landscape, keeping Club Med in the same political parties, by and large. After the crash and the collapse of Fianna Fail as the dominant national movement, the Southern European strain in Irish political thought spun loose and hence Club Med has become a political force to be reckoned with. 

Demographically, Club Med looks a whole lot like a Southern European socialist gerontocracy. Its members are highly reliant on external subsidy. A large portion of the Club Med population consists of students and young adults in the 18-25 age category, so average numbers of children per female are low - with marriage rates being even lower. Club Med has low workforce participation rates and the working population is disproportionately public sector. Club Med has a very low level of workforce participation amongst the young, with a disproportionate numbers of students and unemployed. Over-55 workforce participation in Club Med is also low, with high levels of incapacitating ailments such as diabetes, strokes and cardiac problems. Productivity, skills and education tend to fall into lower percentiles of the national distribution. Looked at in isolation, Club Med looks rather like the Greek electorate that produced Syriza and Golden Dawn or the Spanish electorate that has produced the "los indignados" protest movement.  

In a head-to-head contest, there is no doubt as to where Ireland's bread is buttered. We have not become Greece. Riots and civil disorder are not going to start any time soon. The majority of the population of Ireland has too many commercial aspirations for the country to be able to go down a Greek cul-de-sac. However, the emergence of the Generic Irish Coalition v. Club Med divide is not without consequences. In my next post, we will look at the demographics in more detail.

Friday, 6 June 2014

The Poisoned Chalice of Labour's Next Leader

Last week, I assessed what the Labour Party might look like, depending on which of its two current leadership candidates wins the upcoming contest. Having reviewed their histories, I concluded that an Alex White leadership would almost certainly result in the near total annihilation of the Labour Party outside his base of suburban upper middle-class, socially progressive voters. On the other hand, it would take a special kind of ineptitude (and yes, we are talking about the Labour Party here, so it can't be ruled out entirely) to lose that vote as well as the one it has already lost, so Labour could thus enjoy a limited future as a cultural icon of politically correct chic - for as long as the fashion lasts. I even thought up a slogan: "Say no to the Tea Party and yes to the Dinner Party!!!"

By contrast, I decided that Burton was the high risk candidate, who could potentially leave the Dinner Party vote behind and take the Labour bandwagon out on the road to win back the party's traditional heartlands. Success would mean the retention of a vote of sufficient size to maintain critical mass. However, such a strategy could simultaneously scare the horses in South Dock, Rathdown and Kingstown, whilst failing to win back the lost working class support - in other words, total annihilation. Bye, bye Labour, 'twas nice knowing you.

However, beyond the question of whether Labour can survive as a national party lies a much more basic one - why would anyone want the prize that Labour seeks? Why waste the prime of one's life on a battle which determines who gets to turn out the lights? For beyond the background noise, this will be the job of whichever person enjoys the dubious honour of leading the twentieth century left into what is fated to be its swansong.

The last six years have been years of denial and evasion in relation to all sorts of unpalatable truths, foremost amongst which is the death of the twentieth century welfare state and with it the entire ideological substratum of progressive leftism. Some may put the date of death rather earlier, but for political purposes, the welfare state began its death spiral in the late autumn of 2008. The collapse of a global asset bubble revealed a convoy of interlinked national treasuries whose fiscal health was dangerously dependant on the proceeds of a gigantic asset bubble. This asset bubble was not some detachable appendage to the industrial and commercial base, but a deeply ingrained feature of the entire world economy, public and private. The equivalent of a global leveraged buyout supplemented the paltry returns to national exchequers of the moribund industrial economy and funded three sweet decades of low(ish) tax rates, combined with buoyant revenues, with nosebleed levels of spending and annual budget deficits which were modest (or in the case of a lucky few like Ireland, non-existent). Finally, growing nominal GDP and tax revenue made the accumulating public and private debt mountains look more sustainable than they really were.

This drove a benign cycle of factors which counteracted the left's post-1970s political slump. Firstly, the relatively low tax rates which came into being in the 1980s made public spending more affordable to voters. Secondly, the phenomenon worked equally well in reverse. With governments using operations like child benefit and free/subsidised education to socialise costs that would have otherwise ended up on household or business balance sheets, incumbent tax rates became more bearable. Thirdly, the asset bubble and the preponderance of cheap credit that inflated it eliminated the need that many households had to save. Fewer savings made for more de facto disposable income, making voters even more tax tolerant. Fourthly, booming consumer services industries, construction and Finance Insurance Real Estate financed by an unprecedented accumulation of trade/balance of payments deficits and debt on the part of western nations, increasingly replaced the export industrial base as the main source of new private sector employment. When competing for exports, one must keep one's cost base lean and mean, lest the world turn to one's competitors in Asia or elsewhere. However, an economy increasingly reliant on selling property and services, one resident to another, financed by foreign debt, is subject to no such exigencies, hence a golden decade in the 2000s in which wages and salaries rose and rose and we maintained full employment despite labour, environmental, consumer and other laws that made wealth creating employment less economically feasible than ever before. Of course, all of this comes to an end, eventually, and when the bill comes due, those who ate so luxuriously start to have difficulty in locating their wallets. Inevitably, some would walk away from the table poorer than they ever envisaged themselves being, whilst others would be wiped out and washing plates in the restaurant's unwelcoming kitchen.

In the Irish context, the task of announcing the death of the welfare state fell to Eamon Gilmore. To understand why, one must first realise that a responsible and earnest welfare state progressive would have emerged from deep thought to announce that times had changed and that only a radical triage strategy would save the system from ist post-2008 implosion. The left parties ought to have presented the electorate with a menu of three unpalatable items.

The first would have been a radical series of massive tax increases, not merely confined to the rich (of whom there are insufficient numbers), but to the coping middle classes and the low-income alike. Wealth taxes affecting those with more than €500,000 in net worth; the abolition of the lower rate of VAT and its extension to items like food; vast increases in excise taxes; taxes on confectionery, soft drinks, chewing gum and text messages; income tax increases across the board, including for part-time and minimum wage earners; the elimination of CGT exemptions on sales of primary residences.

The second item on the menu would have consisted of a solemn announcement that the rich and the middle classes needed to be expelled from the welfare gravy train in order to preserve its historic function of helping the poor. What would this have looked like? The means testing of state pensions, unemployment assistance, child benefit, public health care and public education; the shuttering up of all corporate welfare schemes; the elimination of all new public works projects like park and recreation facilities in boroughs with incomes above the national average; massive cuts in public sector jobs and salaries in order to protect frontline services.

The third item on the menu, and probably the most realistic one, would have been some combination of the first two items - or to use restaurant parlance, a half-and-half special.

One imagines that these choices would not have gone down well - but we'll never know because they were not presented and the window for doing so has probably closed. The establishment instead sought temporary solace in the ghost of Lord Keynes, once again repackaging the legend of the self-balancing budget, wherein deficits would stimulate self-perpetuating growth which would raise revenues without pain. Six years on from the great crash and western economies are mired in a lost decade of stagnation where the fastest growing economic index is debt. In this context, Eamon Gilmore acted as herald for the system's now inevitable destruction by announcing that there would be no cuts of any kind (save perhaps for some tiny but high profile cuts to politicians' salaries and the like) and no tax increases other than for the "rich".

It was thus that in one fell swoop, the Labour Party, as leader of Ireland's "responsible left" abdicated responsibility for protecting the financial viability of its most cherished institution. In the absence of a realistic plan to shore up the fiscal basis behind twentieth century social democracy, what, precisely, is the point in a Burton or a White trying to lead it or any subset of it? Surely, the prospect of returning to the comfort of a lecturing position or a practice at the senior bar is of more attraction than a task with so little capacity to satisfy?

A tempting answer is stupidity. There are certainly a few on the left flank whose positions are doubtless motivated by just that, but as an answer to the fundamental question, it clashes with all the available evidence of the key players in the game, most of whom have demonstrated ample ability to pursue their professional lives with great competence - not exactly consistent with a lack of grey matter.

A more plausible answer, perhaps, is ego. Politics is a narcissistic profession at the best of times and the oxygen of publicity is precious to the addict. Oscar Wilde said that the only thing worse than being talked about is not being talked about. Perhaps the contenders for the crown of thorns secretly value the elixir of public recognition so much that attention, even attention associated with failing miserably before a watching world, is superior to anonymity, even dignified anonymity. Maybe the desire for prestige is so great that they are in the mental vortex that must envelope anyone who has appeared on "Come Dine with Me" - a person who watches the camera crew produce a few minutes of edited highlights out of hours of filming, which make the hapless contestants look like freaks and then says to himself - "I could look good on this thing".

Perhaps another factor is that today's fifty and sixty something politicians are having great difficulty in believing that a system that has served them so well will not be there for the use and profit of their children and their political posturing amounts to the acting out of a complex state of denial, as they convince themselves that saving the system is a matter of political will and not the unsympathetic jurisdiction of cold, unforgiving numbers. Perhaps they feel (and not necessarily without justification) that the collapse of an institutional framework that has brought them wealth and comfort represents a guilty verdict on their moral legacy from the jury of history and they are manically striving to save it.

A more cynical take on the situation is that they are looking to the example of Britain in the 1980s and looking at the swelling ranks of voters on the left flank, determined to fight like King Canute against history's tide. Remember that while Mrs Thatcher destroyed the British Labour Party's governing prospects for a whole generation, many of her opponents benefited hugely from the political flux she created. As Labour's old right in the Midlands and the South of England fell like ninepins, the resulting collapse may have destroyed Labour's hopes of governing, but it concentrated more and more of the party's power in the hands of the leftist true believers in the North. Many Labour MPs in disaffected areas built granite-like majorities on the back of voter anger. Politicians like Tony Benn and Michael Meacher built enormous power bases off the back of the refusal of the dwindling Labour base to acquaint itself with reality. Another interesting feature of the 1980s was that after the destruction of the Southern and Midlands based Labour right, their vacuum was filled by soft left MPs from Northern England and Scotland like Tony Blair, Jack Straw and Gordon Brown, who formed the basis behind New Labour. Remember also that trades unionists like Jimmy Knapp and Arthur Scargill, playwrights like Sir John Mortimer, singers like Elvis Costello, actors like John Cleese and Prunella Scales, film directors like Ken Loach and comedians like Ben Elton developed celebrity reputations and fortunes by campaigning against changes that happened anyway. Perhaps the hommes (et femmes) révolté of the left see similar opportunity for themselves amid the chaos of a collapsing system - namely an opportunity to enrich themselves by cynically profiting off their political base's impotent rage.

Of course, this cynicism is not necessarily confined to the elite players. The gerontocratic spectre of grey socialism stalks the corridors of power like Banquo's ghost. It cannot have failed to occur to the final beneficiaries of the postwar political order that their own lifetimes are much more finite than that of the society in which they live, which will have to face the music long after they have shuffled the mortal coil. Many of the beneficiaries of the state pension and the union-negotiated defined benefit schemes established in the twentieth century must have worked out that if the young are fooled into believing that the same will be available to them in due course, they will more willingly continue financing their parents' Ponzi scheme. Conveniently, when the bill comes due, the current insider class will hopefully have moved onto the great welfare state in the sky. There is thus some political value (depending on who you are) in having a political class devoted to underwriting intergenerational looting behind the virtuous political veil of preserving a doomed system.

Or perhaps there is a blindingly simple explanation, that beyond the language of hope and renewal, the left's officer core is sitting in the political equivalent of Hitler's bunker. While the grim news comes in from the front and the sound of artillery fire just a few metres away can occasionally be heard, the ensconced leadership can't see beyond the oak panelled board rooms, the polished floors, the immaculately dressed guards and sentries and the well organised appearance of order and harmony to the blood and the dust of the battle front, the devastated infrastructure and the collapsing supply lines. As such, the availability (for now) of the trappings and infrastructure of power and influence have convinced the hapless apparatchiks that their crisis is simply a nastier than average variant of business as usual. The resulting educational process will be grim.

Wednesday, 4 June 2014

The Powers That (Should Not) Be

Fintan O'Toole's commentary in yesterday's Irish Times should be required reading for Enda Kenny as he copes with the fine balancing act of preserving his tenuously configured government after an election that has robbed his party of a third of its general election vote share and two thirds of his coalition partner's. It needn't, of course, have come to this - for Fine Gael at least - but that much is now water under the bridge. Fixing the leakiest of the political plumbing before going into an election virtually guaranteed to deliver losses is about the best that he can hope to do. Of distinct concern to Kenny now must be the capacity of his coalition partner to destabilise the remaining two years of this parliament (and, by extension, the country), and O'Toole's advice to the Labour Party gives a fairly good roadmap for how such destabilisation might play out.

O'Toole devotes his article to outlining "[e]ight ways for Labour to give itself a chance of revival". In it, he outlines eight specific measures by which the Labour Party might save itself from electoral annihilation. What makes the proposals interesting is that they probably represent the best publicly available summation of the policy predilections of a typical Labour activist or backbencher, meaning that some version of this wish list, whether or not presented in a single document, is likely to land on Enda Kenny's desk in the next six months. If it does, then he should be worried, very worried.

The proposals are of a fairly tried and tested social democratic variety, warming over policies, variants of which have been implemented over and over again over the last sixty odd years. Indeed, O'Toole, to his credit, more or less says as much, saying:

"These are not revolutionary ideas: any functioning social democratic party would already have implemented them."

What this statement underlines, however, is the central problem with O’Toole’s worldview (and to varying degrees, those of the entire political establishment together with most of the supposedly dissenting rebels). We live in extraordinary times, in which the financial equivalent of a tidal wave has washed away much of the financial base underpinning the twentieth century model of welfare state governance. The fact that the ideas are “not revolutionary”, itself suggests that they have not been properly thought out and the fact that they have already been implemented by social democratic governments in less straitened circumstances, itself suggests that they are not a fit to the post-2008 world in which even after six years of “austerity”, our budget deficit still hovers around a ruinous 7% of GDP. A detailed examination of the ideas themselves only confirms these fears.

1.      Stop inflicting stupid and unnecessary cruelties”: O’Toole begins by dusting off his complaints about the recent medical cards controversy. He even makes the beginnings of a valid point in condemning fiscal adjustments which raise little money but cause disproportionate hardships to the recipients. However, he reveals the emotional immaturity of his underlying mind-set by engaging in the toe-curlingly undergraduate rhetorical flourish of exhorting Labour to “[j]ust stop the institutional sadism.” Six years after the crash, O’Toole still seems, on some emotional level, to believe that fiscal adjustments are being made for fun. It also doesn’t seem to occur to him that the failure to make deeper cuts to public sector earnings or payrolls might have had something to do with the cuts he opposes.

2.      “Start a large-scale programme of social housing”: He advocates this on the usual progressive grounds of dealing with homelessness (a laudable endeavour, no doubt) and of fatuous Keynesian job creation. Quite apart from the question of how this expensive boondoggle is going to be paid for by a government in debt to the tune of more than its GDP and with a cavernous budget deficit to boot, he does not say. Surely a more sensible suggestion would be to release NAMA inventories for social housing purposes rather than building new houses which we don’t need.

3.      Set down as an unalterable principle that the effect of the next two budgets must be progressive”: O’Toole excoriates the government for the fact that “in the 2014 budget, the bottom 20 per cent were harder hit than any other group – a staggering result for a Labour-influenced Government.” Leaving aside the philosophical debates about taxes, rates and spending, has it not occurred to him that the failure to achieve deeper cuts under Croke Park and Haddington Road for the well paid members of the government’s payroll was regressive? Is Fintan O’Toole advocating public sector pay cuts? My guess is probably not. It seems that fiscally progressive policies are only laudable when they help the unproductive at the expense of the productive.

4.      Help the working poor”: At this point, perhaps, things might start to get interesting. One of the more irritating aspects of modern “Labour” parties is that they seem to be concerned more with the affairs of those who don’t work than those who do. Disappointingly, however, O’Toole reaches for the most comprehensively discredited tool in the box – a “living wage” law. It would appear that in addition to his many other talents, O’Toole has discovered a way to abolish the supply-demand curve. This is a policy which will actually devastate those on lower incomes by eliminating every job whose productivity is not sufficient to justify paying a wage that government regards as appropriate. The only way this will help the working poor is by freeing them from their work, and methinks they might not appreciate the loss of income.

5.      Child-proof all State decisions”: O’Toole denounces “austerity” for having disproportionately impacted the young. Does this mean that he is advocating cuts for the comparatively prosperous elderly? He doesn’t say but one presumes not, as all that follows is the usual laundry list of bromides about spending more money.

6.      Put together a specific, time-limited plan for breaking the link between banking debt and sovereign debt”: I wonder what will happen to Mario Draghi’s commitment to buy Irish government bonds if our government gets difficult in relation to the bank debt that the EU imposed on us. The old expression about heat and kitchens comes to mind.

7.      Get real about democratic reform”: O’Toole excoriates Labour’s complicity in the neutering of local government and other apostasies. However, most notably lacking from O’Toole’s analysis are the roles of the EU and social partnership in emasculating Irish democracy (especially local democracy). Might this have something to do with the author’s regular advocacy on behalf of these institutions prior to 2008?

8.      Reclaim the equality agenda”: O’Toole starts off promisingly, saying that “[l]egal equality isn’t just about gay marriage.” However, what follows is not an exhortation to move away from elite-centric identity politics to a more practical agenda in relation to income or wealth inequality, but a tirade against religious education and a call for religious-run institutions to be denied employment equality derogations. Quite apart from representing more of the same, the lack of self-awareness of a man who can talk about equality under law and then propose to deny people the freedom of religious conscience beggars belief.

Taken together, this wish-list is an open invitation for Enda Kenny to do to his party’s vote what Eamon Gilmore succeeded in doing to Labour’s in the Local and European Elections. How he reacts to the onslaught of whoever takes over the Labour leadership will define his leadership once and for all. 



Monday, 2 June 2014

Labour's Choice: Part II

This piece was originally published on Facebook on 1 June 2014)

Having described the fight between Joan Burton and Alex White as a fairly self-explanatory choice between a culturally upmarket focus on fashionable social progressivism and a more downmarket hardscrabble economism, it is necessary to trace the demographic implications of each choice. In Randy Edelman's superb eponymous hit, he sang of the relationship between "the Uptown Up-Tempo Woman and the Downtown-Downbeat guy". With the respective genders appropriately inverted, White fits the former role and Burton the latter. Those who remember the lyrics of Edelman's song will remember that its two protagonists' romance was doomed by their divergent backgrounds - an unusual example of realism in the music industry. So too is the demographic coalition developed by Dick Spring in the early 1990s consisting of working class rural and inner-city voters, leftist intellectuals and middle class social progressives in the suburbs. This coalition has been disintegrating since the early 2000s, was given an artificial lease of life by the 2008 crash and has recently resumed its secular trend of disintegration. The choice between White and Burton represents a Sophie's choice on the part of the Labour Party as to which part of the coalition to save.

White:

As far as they are capable of being precisely determined and demonstrated, Alex White's political views appear to roughly approximate those of a precocious 16 year old transition year student in a fee-paying South Dublin school. Economically, his views seem to consist of vague ideas about "fairness" rather than representing any kind of significant operational vision for how economic policy ought to work. Socially, fashionable gentry progressive views reign supreme and seem to occupy an outsize role in his worldview. He might, perhaps, have had some precise views in relation to discretionary medical cards, but he comes from a wing of his party which feels little in the way of emotional investment in such an issue, hence the remarkable tin ear he has shown in relation to the matter when doorstepped by the press.

The decision to pick White as party leader would have a profound and deeply ironic consequence. The historical wave that generated the election of Mary Robinson in 1990 and the Spring Tide in 1992 was underwritten by the addition to Labour's standard public sector, union and working class support base of the socially progressive-minded suburban professional or manager with typically ill-defined views on economic issues. In last week's elections, this vote stood up relatively well, with support elsewhere spectacularly imploding. There can be no better examples of this trend than Labour taking 21% of the vote in Rathmines and crashing to just over 10% in Dublin North Inner City. The election of Alex White ratifies this change permanently. A White leadership essentially guarantees that a hard core of Labour support will survive in the Dublin and Commuter Belt suburbs, while everywhere else (with the possible exception of one or two regional holdouts like Carlow-Kilkenny) withers on the vine. Thus, 22 years after Dick Spring made Labour chic in Dublin 4, the extra votes that he won for the party will be the only votes that the party has left. Paradoxically, the party of the working man will have allowed its nest to be colonised by a progressive middle-class cuckoo. A White leadership would likely represent the closest existing strategy to a safe choice, representing a decision to become a party of nice, pro-choice, pro-immigration, multi-culti suburbanites with a delegation of perhaps a half dozen like minded TDs. This option is quite seductive to any Labour TD or aspiring TD who fancies his chances of surviving such an electoral holocaust. It finally leaves them with a truly progressive electorate that they don't have to despise. Being one of the TDs able to survive long enough to reap such fruits is another matter entirely though - and what precisely does such a party do with so few seats and so little raw power? The best way to determine the answer to that question is to elect Alex White as leader. In a "hiding-to-nothing" election, Alex represents a hiding - definitely better than nothing.

What of Joan?

Joan Burton is a better-known quantity than White. We know that she is an intellectually flat-footed and unimaginative Keynesian who worships the public sector and has economic views that consist of rote-learned incantations about the Great Depression. This hardly differentiates her from White or any other potential contender for the leadership. The salient difference though is that while White probably has shallow economic commitments that could be turned with a modest amount of technical counsel, Burton is (in a party not known for having financially savvy members) an accountant and seems to have concluded that this qualifies her as an economic expert. She is thus very difficult to turn.

In her 5 years as Pat Rabbitte's opposition finance spokesperson, Burton's most notable contribution to macro-economic policy was a shrill expose of the number of high earners paying no income tax. Without commenting on the substantive issue, this sort of oppositional politicking is of a variety that makes for a very impressive backbencher or committee chair, not of a finance minister in waiting. Moreover, her command of the issues was often startlingly limited. She accused Gama Construction of breaking the law in not registering their employees for PRSI - they were, at the time, under no such legal obligation. She denounced the government for not closing the "resting in contract" loophole for stamp duty on development land, seemingly oblivious to the fact that it would have the effect of increasing house prices for consumers.

Under Gilmore, she earned a much more seemingly impressive stripe, by opposing the CIFS bank guarantee in 2008. But even this was a politician's snare and delusion. The media accolades only looked impressive because Burton's media fan club failed to emphasise the fact that she favoured the even more catastrophic policy of nationalising all of the main Irish owned banks, which, as Enda Kenny (with unusual perception) described as a strategy to create five Anglos. Her performance in the pressure cooker of the 2011 election campaign was even more wanting. Fine Gael's Michael Noonan swatted her like an insolent fly in the RTE debates and denounced Labour as a "seriously high tax party". Her responses amounted to little more than shallow bromide. In the end, she was reduced to implicitly accusing Joe Higgins of sexism.

Since 2011, her principal contributions to policy have consisted of damning Eamon Gilmore with faint praise and saying that unemployment benefits stimulate the economy - not exactly inspiring fare. But...

Nonetheless, Joan Burton represents Labour's last chance to be a national party. While she shares White's social outlook, the substantive positions have never represented Labour's problem so much as:

(a) the party's tendency to emphasise social issues over and above economic ones - something which irritates the union-centric left and pro-business right alike; and

(b) the impression that progressive grandees give of being unaware that anyone in the country (other than a few Bible-thumpers) doesn't share these views.

Joan Burton, having cut her political teeth on the mean streets of Stonybatter, must at least be aware of the existence of another Ireland, in which the nostrums of the Dublin 4 dinner table do not hold such uncritical sway. Burton has the ability to reach a broader and more populous swathe of the electorate in the shabbier climbs of the country. One could call this the Fair City Strategy, a deliberate decision to take the fight directly into the parts of the country that spurned Labour last week. But this strategy is the very definition of high risk. A Fair City Strategy stands a debatable chance of winning back votes that have moved to Sinn Fein or the left. Meanwhile, the back-pedaling of the social agenda will likely involve a more dirigiste economic agenda which likely destroys the party's credibility among the "Modern Family" voters in the suburbs. Such a result would combine the worst of all possible options.

High stakes poker indeed. Of course, there's another question. If the strategy pays off and it's a long shot, what prize will Labour win? That's a topic for another post.

Labour's Choice: Part I

(This piece was originally published on Facebook on 1 June 2014)

A week since our Local and European Election extravaganza, I have decided to address myself to the task of giving entirely unsolicited advice to the Labour Party in relation their current choice of leader (you're welcome comrades). As of the writing of this post, it looks like Arthur Spring will not be a candidate, and on this basis, it appears that we are looking at a straight fight between Joan Burton and Alex White. As a candidate choice, these options do not greatly inspire. However, as an exemplar and symbol of the state of Labour and of left wing ideology in general, White v. Burton, as a battle for the heart and soul of a movement provides rather a good cross-sectional indicator of where that movement's heart and soul are located and what their constituent parts are.

Substantively, White and Burton are very similar candidates. From its foundation until 1981, when Frank Cluskey was defenestrated by his constituents, the Labour Party was exclusively led by non-graduate trade union officials from working class backgrounds. Since 1981, every Labour leader has been a college graduate with an exclusively white collar career history (Michael O'Leary - Barrister and Trade Union Official, Dick Spring - Barrister, Ruairi Quinn - Architect, Pat Rabbitte - Teacher and Trade Union Official and Gilmore - Trade Union Official). An increasing trend towards Dublin leadership is also evident. Since Spring, a Kerryman, left his position in 1998, the party has been exclusively led by Dublin TDs. Both White and Burton fit the new Labour leadership mold perfectly. Both are graduates. Both represent Dublin constituencies.

Both have views that are straight out of the cookie-cutter soft left playbook. Their social views both consist of fairly unimaginative progressive identity politics. Their economic views are largely benchmarked to the long term interests and historic intellectual prejudices of the public sector professional caste, and any convictions of great depth would appear to have been washed out of them in the rinse and repeat cycle of Irish institutional corporatism, in which it is the role of the Irish trade union movement to sound angry and negotiate cosy deals behind closed doors and the job of the Labour Party to sound idealistic and do as they are told once the power brokers have made their decisions. This ensures continuity at the top. There will be no Tony Blair moment. There will also be no Michael Foot moment. There will be no attempt at forging a Blue Labour in the mold of Jon Cruddas or Maurice Glasman. We will simply get the classic Obama-era product - statism combined with cultural modernism.

However, politics, and especially centre-left politics, is never entirely a question of policy difference, but rather, a battle of competing cultural projections. It is this emotional emphasis that divides the candidates. Which emphasis wins out will in turn set the policy direction of the party and the resulting demographics could alter long-term ideological trends substantially. Think of the current race as a battle between television programmes: Fair City (Burton) v. Modern Family (White). To a person with the appropriate contempt for popular culture and the entertainment industry, both represent vacuity, vapidity and sterile cultural group-think emulsified into an amorphous, low-fibre product which appeals to the emotions of the chosen demographics - working and lower middle class women eager to see people like themselves getting into absurd situations which almost never happen to people like them, in the case of Fair City and hipsters hungry for a self-congratulatory, intellectually onanistic celebration of all things non-traditional in the case of Modern Family . Intellectually meaningless as these shows fundamentally are, try to imagine, for a moment, a party whose supporters consisted solely of Fair City viewers. Then try to imagine a party consisting only of Modern Family viewers. Think of the different demographics behind each show's audience. Then imagine the differences between the fundamental interests of each set of voters. A meaningless delineation will have created real and meaningful and deep differences in interests between the respective bases and a corresponding long-term divergence in policy between the respective parties.

In my next post, I will analyse each candidate and try to shed some light on where each would bring the Labour Party.

The Gilmore Gale (2007-2014)

(This piece was originally published on Facebook on 26 May 2014.)

Today the Gilmore Gale blew its last puff of air and left in it's wake a devastating scene of destruction, not over the political territory of its enemies but that of its own party. It seems that in the throes of their enthusiasm, those who were so keen to act as harbingers of the supposedly new progressive era of leftist governance have turned on their creation. In late 2010, in the wake of Gilmore's 32% showing in the most recent MRBI poll, Fintan O'Toole egged him on, saying that he needed the courage to "settle for more". In tomorrow's Irish Times, O'Toole will no doubt dance viciously on his former idol's political grave. As he contemplates the ruins of his career tonight, Gilmore must have a real sense of how ephemeral it all is, when responsibility beckons and the rubber hits the road.

Eamon Gilmore is, whether he cares to acknowledge it or not, a victim of his own personality cult - one in which he was complicit but for which he was not in truth responsible. The Gilmore phenomenon was, at its core, a South Dublin media manufactured creation. In 2007, Gilmore took over a demographically spent party which had suffered its third consecutive electoral decline, which had failed to win more than 21% of the vote in a single constituency, which had earned not one single full quota of first count votes and whose parliamentary party's average age was older than that of the average Catholic priest. Five years previously, Gilmore had run for the leadership of his party, saying that nothing short of a Labour-led government was an appropriate objective for a leader. It was a sign of the times that Gilmore said in 2007 that 30 seats was not an unrealistic target for the party. Nobody believed it but the lower expectations evidenced the party's dark mood.

From this inauspicious start arose the phenomenon that was "Gilmore for Taoiseach". In 2008, placards emerged at the Labour Party's annual conference, bearing this risible slogan. The opinion poll showing which had prompted this orgy of emotional flatulence had shown Labour on 14% - a full 17 points behind Fine Gael. The rational reaction of the media complex ought to have been derision at such arrogant hubris. However, few in the Irish media were interested in calling it out. They loathed Enda Kenny. They resented the failure of the 2002 debacle to eliminate what they regarded as his entirely superfluous party. His manner was too bumpkiny, his values too traditional and his politics too right wing for the tastes of the Montrose and D'Olier Street axis. How could an electorate be more enthused by speeches by Richard Bruton about fiscal prudence and value for money rather than the rhetorical haze of 1970s political dope?

For two whole years, the drum was beaten, Kenny derided and Gilmore promoted. Yet the only acid test Gilmore faced was failed. In the 2009 local elections, Labour scored less than half of Fine Gael's support - and yet the Gilmore for Taoiseach bandwagon kept moving, oblivious to reality. The lying urban middle class played its part. Just as the South Dublin professional will lie to a pollster about his stance on immigration, taxes or crime, he will tell the nice pollster what he thinks the right answer is. The more that Fergus and Fiona from Foxrock (to use Eoghan Harris' sobriquet) were told that they should like Gilmore, the more they told the pollsters they did.

We all know now that Gilmore's polling numbers were greatly superior to the true nature of his support. However, the false signals created by the media propaganda distorted Eamon Gilmore and Joan Burton's views of what constituted realistic policy. Instead of formulating policy by reference to a realistic analysis of the country's parlous financial state, they retreated to a Keynesian fantasy world in which there would be no service cuts, no welfare cuts, no job cuts, no public sector salary cuts and no tax increases for those on under €100,000 a year. It was in the context of this reckless mendacity that Labour has suffered its implosion last week.

Gilmore has honourably taken responsibility (to some degree at least) for his monumental misjudgement. But what of his enablers? It looks more than possible that the architect of his catastrophic 2011 economic programme will be the immediate political beneficiary of her boss's fate. Politics is replete with irony, an irony which Eamon Gilmore's unlikely political career, now in ruins, bespeaks. Good luck to him now. He has been held accountable. His fair weather friends are next - and their callous abandonment of him cannot save them from their fate...