Saturday, November 28, 2009

Time for mutiny on this ship of fools

Over on the Sluggerotoole site they have highlighted a review on the Guardian newspaper of Fintan o'Toole's new book Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger.

It looks like its going to be an interesting read and above all its fantastic to see this type of contribution to the general debate. After the fall of the Soviet Union Finland nearly fell as bad as we now have fallen. But they rebounded rebuilding a fairer society and becoming an inspiration to other countries. So while things may seem incredibly bleak now this is an opportunity to start building something new.

Of course the Finns didnt have to deal with a Fianna Fail party but the debate has to start somewhere and if we are going to build a Republic on this island then getting rid of the corrupt Fianna Fail kleptocracy is a necessary step.

The book review highlights clearly our predicament:
Irish GDP is now shrinking faster than in any other advanced economy, and the country's gross indebtedness is larger than Japan's. House prices have fallen more rapidly than any others in Europe, and the average Irish family has lost half its financial assets. Unemployment has risen faster than anywhere else in Europe.
It lays out clearly how Kleptocracy relaced democracy in the south:
All this has been accompanied by a culture of corruption so shameless and spectacular that it makes Dublin look like Kabul. The former prime minister Charles Haughey stole €250,000 from a fund set up to pay for a liver transplant for one of his closest friends. Last year, the chairman of Anglo Irish Bank resigned when it emerged that he had €84m in loans from his own bank, a sum concealed by an annual (apparently legal) cooking of the books. As O'Toole points out, bribery, tax evasion and false evidence under oath have not simply gone unpunished; the very idea of penalising the culprits is viewed by the governing elite as unsporting or even unpatriotic.
And thats to leave out the most cunning of them all. The review continues apace laying bare whats rotten in the southern state:
The state is widely seen as "a private network of mutual obligations" rather than an impersonal body. Palms are greased, backs scratched and old pals promoted, often without much sense that this is anything other than the natural thing to do.
And boy did the last 10 years take that to a new height. The worst type of gobdaw was appointed not because they were barely qualified but because they were the orignal greasy hands in the till.

And then it gets to a point of discussion that is all too common in Ireland today:
The discrepancy between formal and informal codes in the country, between official behaviour and nods and winks, bulks large. Stretching a point or turning a blind eye is rife, in ways that would scandalise many a German or American
How do we make our country more like Germany and less like a maffia ridden fiefdom? Now those countries are not perfect but for all the American pork barelling at least they have some corrupt people do the perp walk.

Why are basic minimum standards of governance ignored in this state.

Why are key positions farmed out to buffons whose only qualifications was buying rounds with one pint of Bass included.

The review ends by saying for the south
Perhaps its best hope now is to revert as soon as possible to third world status and qualify for a loan from the IMF.

Is that what we are reduced to?

Once upon a time people in the south believed that the Greens would be the party that would drag the south into the modern world. We have two failed states on this island and need to build one - a modern state, where merit is the key to advancement and nomal democratic standards are upheld.


  1. Define merit!

    Does the environment in which the meritorious operate affect just themselves or everyone else? - especially the non meritorious or those whose objective in life isn't to be meritorious (just work and raise a family)?

    May seem like a nit-picking point but imho it's the current theme of the knowledge economy whereby the "meritorious" will dictate to the non-mertirious and continue to justify the obscene ill distribution of our nation's production, deepening the wealth divide and encouraging the detioration of culture and community.

  2. This fawning over Finland as a utopia is hard to put up with. Finland's *depression* in the 1990s was a disaster for their working class. Instead of liberals like O'Toole it would be better to read research papers like this to find out what really happened in Finland.

  3. Tbh, i couldn't finish reading this article to the end, tgmac. It's another brutal exercise in quack economics.
    Somebody take a look at Greece right now and learn. They're facing default. The EU are not bailing them out the same way the ECB underwrote the massive Irish banker bailout. Why? Because Greece has not yet committed the scale of cuts that Europe demands. They're playing hardball.
    Ireland has already signed up to same and so the ECB are underwriting the NAMA monstrosity.
    A lesson here for those who dream about increasing tax and eliminating tax avoidance (the latter is all the Greeks are offering at present). Do that and you will find the ECB withdrawing from the NAMA bailout.
    Time to get real with economics.

  4. Hi anon of 3.39 who I guess is the same anon in the first post.

    I wrote a reply to the first post but lost it - technology eh!. Ah well. I'll try to be concise.

    I dont think there was anything particularly fawning over Finland. IIts a good example IMHO cause its roughly the same size as us. Together we vie for the largest drop in real gdp in an industrialised country since the great depression. They are still a fairer country than the south. Utopia? No but nobody claims they are? Just a bit fairer than we are and also they have experienced the same level of disaster as we are now experiencing. A good lesson for us as your paper points out and maybe something better to aim for.

    The paper you linked to is interesting. Thanks. But it is not a review of the sructural changes to the finnish labour market rather than an investigation of whether the policies pursued by the Finnish govt. failed. I am sure there are papers detailing such failures but I dont think this paper does that.

    My writing may suck :) ( i was an average student) but I am not sure that the article is a brutal exercise in quack economics. If only because it does not refer in any way to particular economic points.

    So brutal maybe but surely not in reference to any particular economic points.

    Greece - Their public debt is expected to rise to 135pc by 2011 from mid 90s this year. They have €18bn coming due for repayment in the second quarter of 2010. Certainly there seems to have been a decision to let the greeks hang but they have not been served their best interest well either.

    Thanks for your contributions and if possible can you give yourself a letter or reference cause it can get confusing with all the anons.


  5. Hi Tgmac,

    I can see your points about merit and agree with you but I was not thinking about a meritorious class but rather simply merit in the sense that people should be given jobs in public bodies because they are qualified and not because they are donating cash to a certain poltical party.

    There will always be an elemnet of that thing going on but as bad as it is now surely there is a better way of picking who sits on our public sector bodies than the buddy system. Thats what I meant by merit. Whats the best way to go about doing that I am not sure.

    Any ideas?

  6. Like yourself An Giorra, I'm no economist nor that decent of a writer. Like yourself, we've a common interest in economics as it relates to politics, but this is a political party website which discusses/debates a broad range of subjects. I find the articles posted by various contributers to be worth considering, and they're posted so we can discuss the issues I take it.

    I'm not being negative. I think SF is taking its economic polity in the right (to the left) direction, but it's always has to be embedded in the grass roots. Learn from the wage earner's problems. They are our problems. [Kind of wandering here.]

    Re: Merit - Aye, we want the right people in the right jobs. That's fairly logical. By what citeria do we measure what is the "right" person? There's the rub. Just because someone has some a degree isn't enough of criteria. Is a degree from Harvard better than one from UCC? You bet it is. Does this mean you hire a Harvard grad over a UCC every time - even if the applicants have the exact same grades. That wouldn't be logical. The Harvard name just has a caché. There are dozens (hudreds?) of different factors that will make a person right or wrong for a job.

    Bottom line, what we take to be objective criteria are often just dressed up subjective criteria; criteria which salves the need to believe that the world isn't a capricious place oftentimes.

    Let's take a more concrete example. Our present govt and their glam-monkies in the MSM including their various "expert" pundits in every walk of life believe they are the meritorious class. I haven't one bit of doubt about this. This is why they cook up schemes llke NAMA, and this is why they feel entitled to make ordinary wage earner's pay handsomely for the meritorious's financial mistakes. They are failures. Yet, by the very virtue of the positions they fought for (backstabbed, lied, kissed arse?) in society, they feel only they can make the rules. If Capitalism, as it claims is sooo efficient, 1000's would be on the dole that now currently run banks, public works offices and govt departments.

    When it comes to allocating jobs, we just have to be honest with all workers. Someone may land in a job they love, perform the functions well, and get on with their co-workers. Others people need several chances. Some will end up taking what they get. If a person isn't right for the job, well no hard feelings; there's other jobs opportunities to explore (or there should be).

    Like, I said, a politicos job isn't easy, and I think SF is, as a party, beginning to exhibit signs of a more cohesive and nuanced approach these days; but it is only a start. Barring a revolution, the real-politik stance is the game in town. As the party makes its transition positions and policies clear, it and we must realise these moves are only the beginning, and not an end in themselves. It's hard to visualise this considering SF's modest proposals aren't getting a modicum of debate in the MSM that they deserve.

    That's kind of where I coming from and hope to have other nit-picking opps in the future ;-].


  7. Giorra, Finland is to my mind far from a model economy.
    Check this paper out (it's in Finnish) but the graph tells the tale.
    The red line is median income, the blue is mean and the green is the difference. This reflects how the economic collapse in Finland resulted in a huge growth in economic inequality as the country 'restructured'. Clearly, the period in question has seen a massive growth in inequality. Do we want to replicate that in an already unequal Ireland?
    And again, do we really think that Ireland can compare to Finland in terms of the economic fundamentals?
    I have other papers if you want on Finland but they all show the same thing, Finnish growth was built on the monetarist precepts of slash and burn 'restructuring' at home with low inflation and export-led growth. The fact that they're slightly better able to maintain a social welfare provision after all that reflects their domestic economic strengths (they are not dependent on FDI-led investment like Ireland).

  8. Hi, pick a way a chara :) its nice to explore topics and look at things from different angles.

    I saw the following posted on irisheconomy by an economist Frank Barry : "I see from yesterday’s Sunday Tribune that Maurice Manning, as President of the Irish Human Rights Commission, earns a higher salary than the Taoiseach. Much less responsibility, and this salary has to be well above Manning’s opportunity cost (as a former middle-ranking academic and senator). No global competition arguments apply to such political appointments. Definitely something wrong here."

    But as you point out the rub is how do you regulate that type of thing, that overpaying is same as Pat Kenny.

    on the meritorious class thinking they know better - several times in conversation with work colleagues i have been stunned by how aparently decent people come out with the most dismissive coments about people who either work in shops, the army, ordinary civil servant positions. The last one was a girl who commented about someone just being a mechanic. I cant get how some people think like that but these people do genuinely think they are better than others. They really do see themselves as the meritorious class

    J (different to the above poster)

  9. Economist,

    You made a reference to Greece. The squeeze is on as was revealed today in letter Juncker wrote to the greeks:

    Juncker effectively tells the Greeks that they have to reboot their entire economy. This is what the letter says:
    1. Force wage moderation in the public sector in line with the euro area own inflation target
    2. Government should adopt a new pricing policies, as Greek price get out of line
    3. Restore competitiveness to the Greek economy
    4. Make the statistical services independent
    5. Open the professions, especially those of importance to the Greek economy, such as road transport;
    6. Speed up the adoption of a new tax bill
    7. Increase the tax on liquid fuels, the lowest in the euro area
    8. Revise the 2010 budget

    On Monday, Mr Papakonstantinou replied to say he has decided that he would prepare a supplementary 2010 budget if necessary. The newspaper also remarked that the Greek seems willing to accept the austerity call from Brussels, and in particular that they are “willing to go to a substnatial fiscal adjustment.”

    Some of those points are not unreasonable (i,e 4 an independent statistical agency) but the other ones could be nasty as you like. Greece is going to have a tough time.

    That could be a country that gets very hot over the next few years.