Author: paleoutlaw

THE MAKING OF THE PRESIDENT 2011

Theodore White’s book on the 1960 election of JFK has become, rightly, a classic of political reporting . In what was a watershed election, his book changed the way U.S. politics and elections were regarded. It chronicled the changing pattern of society in the USA 50 years ago, including the way in which television had emerged as a major factor in informing and influencing public opinion..

We have just had a presidential election in Ireland, one which saw Michael D. Higgins, the veteran Labour Party politician, elected as Ireland’s eighth President, with the aid of TV. The election came towards the end of what has been a tumultuous year in Irish politics, with the previous government  dumped unceremoniously out in February. This was the first chance the electorate had to vent its feelings since, albeit for what is officially a largely ceremonial and non-political office.

The results and those of two constitutional referendums  held simultaneously are being pored over by commentators and public alike after the most extraordinary presidential election campaign Ireland has witnessed.  “Michael D.”, an intellectual from the left wing of the Labour party, ran a consistently  low key and non-controversial campaign and was always first or second in the opinion polls, which otherwise showed widely variable levels of support for his six opponents. Even when he slipped behind as polling day approached, his overall popularity ensured that, under our PR system, where second and third preferences can count, he would be there at the finish. In fact he won easily with almost 40%  as his chief rival, independent Sean Gallagher, self – destructed on national TV and radio just three days  before the vote. Shades of 1960.

The other candidates had fallen by the wayside well before. Most spectacular was the failure of Fine Gael’s Gay Mitchell, who polled a miserable 6.4%. Fine Gael, as the largest party at 36% in the polls, had had high hopes of victory, but from the outset,  Mitchell, a decent but abrasive politician, failed to make an impact. Scoop Jackson’s  abortive candidacies in the 1970s come to mind.

Dana, Eurovision winner in 1970, was never going to be a serious contender, and the revelation that she had acquired US citizenship a number of years ago did not help. Mary Davis, another independent candidate,  polled well initially in an anti -establishment atmosphere, but foundered when her presence (and earnings) on a number of State Boards were publicised,  leading her to be dubbed the “Quango Queen”.  Davis and Dana each polled less than 3%.

The colourful gay Senator, David Norris, had briefly led the polls as the campaign opened. However,  his always controversial campaign was dealt a mortal blow by the revelation that he had written to the Israeli courts pleading for clemency for a former lover – and pro-Palestinian activist – convicted of statutory rape of a 15 year old boy. Norris left, then re-entered the race,  garnering sympathy by his efforts to secure, as an independent, a place on the ballot paper under Ireland’s complicated and restrictive selection procedures. Public support, however, stopped at ensuring he got on the ballot and he received  just 6.2%.

Martin McGuinness,  Sinn Fein’s very high profile candidate, had entered the race with a definite agenda. This was not to win but to maximise his party’s support as part of a medium term strategy to displace discredited Fianna Fail as the major republican party, akin to the way they had brushed aside the SDLP in Northern Ireland.  While he increased Sinn Fein’s share of the vote by almost 40% to 13.7%, there was considerable consumer resistance to McGuinness’ previous record and reputation and frank disbelief at his claim to have quit the IRA in the mid-1970s. Sinn Fein clearly has some way still to travel.

McGuinness did, however, succeed in ambushing, live on TV, the surprise pre-election frontrunner, independent Sean Gallagher. Gallagher, a former member of Fianna Fail, with an existing media profile, had come from nowhere during the campaign to enter the final week with a commanding lead in the opinion polls (40% to 25%). His appeal had in part derived from the prevailing strong anti-political party mood and on the perception that his active involvement with Fianna Fail had been slight.  However, during the last TV debate, three days before the vote, confronted by a  McGuinness allegation  that he had been chief organiser for a  $7000 a plate Fianna Fail fund raising dinner, Gallagher first equivocated and then contradicted himself.

The truth as it emerged was somewhat  less dramatic  but certainly showed Gallagher to have been very  much politically involved with Fianna Fail.  This was compounded by  unconvincing responses to separate technical questions on transactions in some of his companies’ accounts. A professional politician might have winged it. Gallagher did not. It was enough to burst the Gallagher bubble and his support ebbed rapidly. In the event, he finished a creditable second with 28.5%.

Conclusions are already being drawn, not necessarily all correct. What IS beyond doubt is that the electorate is volatile, subject to rapid mood swings and prepared to punish on a whim. This was further emphasised by the close last minute defeat of a government sponsored referendum to establish political tribunals of enquiry. The election of Michael D. does not demonstrate  a shift to the left, more that he was the one where positives most outweighed negatives. And, without Gallagher’s  TV debacle, he would probably not have won.

Clearly Fine Gael did very badly, and its candidate flopped also in the day’s separate by election. Yet whatever about the candidate’s shortcomings, the party still has to grasp that the last general election was not so much won by Fine Gael as lost by Fianna Fail, and that it must keep working hard, and in touch with the grassroots, to cement its first place position. With a tough budget pending this could prove difficult, particularly with Sinn Fein and the assorted left yapping at the government’s heels.

What of Fianna Fail? Arguably  Sean Gallagher could be seen as a surrogate Fianna Fail candidate and the aggregate of  his and McGuinness’ vote actually comes close to that secured by  Fianna Fail in 2007. Sinn Fein failed to make much progress in its bid to supplant Fianna Fail nationally, while in the separate by-election  the Fianna Fail candidate polled surprisingly well. The jury on the “republican party” remains out.

A final point. All the candidates were subjected to unprecedented media scrutiny, pressures and demands for commitments from lobbies. Some were asked at one point whether they would use the Presidential residence to house  people rendered temporarily homeless when their apartment complex was vacated for fire safety reasons. Other equally inappropriate issues were  raised with the hapless candidates. Several were asked whether, if elected, they would help empty commodes when officially visiting hospitals. These questions were put, in all seriousness, to candidates running for election to be Ireland’s Head of State. Michael D, in his response, restored some perspective (and gained some plaudits) when he stated he would do what the Irish President was expected to do. He will maintain the dignity of the office. Of that we can be sure.

CRYSTAL  BALL GAZING

A favourite story of mine concerns teaching a horse to talk. The story occurs in various forms but is usually attributed to a character in Islamic folklore, Nasruddin. The story concerns a man who has offended or outraged a king and is ordered to be put to death.  He pleads for his life and tells the king that, if spared for a year he will teach the king’s horse to talk. The king accepts the offer but promises a worse death one year on if the man fails to deliver..

The man is upbraided by his friends for his foolishness. He responds:  “I have gained a year. In that year I might die. The king might die. The horse might die. The king might change his mind. And who knows….I might even teach the horse to talk.” The moral being that much can happen in a year. The corollary is that forecasting what will happencan be difficult.

Take the Irish Presidential election. By the time you read this Ireland will have a new President. The race at this stage is too close to call with seven candidates and given  our quirky  electoral system. It has been fascinating. The last two Presidents have, with style and energy, transformed a role that is largely ceremonial, raising the stakes for all candidates this time round. The attempt by Sinn Fein to supplant Fianna Fail as the major opposition force by running its strongest candidate , Martin McGuiness , has added to the contest.

Indeed  who wins is just one of the interesting aspects of the campaign. The results, including the transfers between the candidates, will be studied closely to see whether  the remarkable outcome of the general election last February was a once-off or whether it marked a sea-change in Irish politics. Together with the accompanying by-election –to  fill the seat vacated by Brian Lenihan’s death (what had been Fianna Fail’s only seat left in Dublin) – the Presidential poll gives the first opportunity to stocktake. There are signs that the Teflon coating on the new government is starting to crack as the first painful budget approaches with its room for manoeuvre circumscribed.

Certainly there is a new volatility among a large section of the Irish electorate, a willingness to be ultra – critical and to “throw the bums out” if they are perceived to have failed to deliver. In February this led to a collapse in the Fianna Fail vote, with much of its traditional support seceding along class lines, middle class to Fine Gael, working class to Labour, republicans to Sinn Fein.

Since then Fianna Fail has signally failed to recover and has seen its support decline further in the polls, culminating in its decision not to contest the Presidential election. In vain has the party leadership pointed out that the new government is doing little beyond following the Fianna Fail blueprint for economic recovery. So far the electorate has seen through that one – the programme for recovery, negotiated with EU and IMF guns to the head, would never have been necessary in the first place had Fianna Fail not wrecked the economy.

Fianna Fail now faces a challenge for its self-proclaimed Republican soul, this time in a head to head with Sinn Fein which is also stealing what is left of its populist quasi left-wing appeal. It can do nothing about it as it still tarred with the brush of economic mismanagement as well as the harsh programme of recovery. The omens do not appear good.  Already some analysts are drawing analogies with what happened in Northern Ireland, where Sinn Fein has shouldered aside the SDLP. Sinn Fein has a formidable party machine and  a hard –headed leadership. And, it should not be forgotten, two decades ago a sizeable rump of the political wing of the Official IRA began the odyssey that led to membership of a government coalition (as the Democratic Left), before eventually merging with the Labour Party, where its leading members soon rose to prominence. Could this process be about to be repeated, ceteris paribus?

Lest we forget, however, these events in Ireland have a slightly “phoney war” feel to them They are taking place against the background of the on-going  uncertainty  in the international economy  We have our own problems, and we are grappling with them. Indeed we’ve earned brownie points for being the good guys and taking our medicine within the EU,  unlike the Greeks. The current popular line is that Ireland will be well placed to take advantage of the world economic recovery, when it comes. In one form or another all the political parties buy into this line.

Whether we can deal with the debt mountain tends to be glossed over, or, in a classic example of doublethink, our debt is dismissed as being something that will be subsumed in the new arrangements to follow a realignment of the world financial situation. This may well be, but there seems little or no appreciation of, and certainly no debate on, the collateral damage for Ireland that any such realignment would entail or, indeed of the type of catastrophic global economic situation which would necessitate such a realignment.

The Left, with Sinn Fein as cheerleader in chief,  has embraced with enthusiasm the  localised alternative of a national debt default. This tends to be viewed through Micawberish spectacles, an approach reinforced, up to now, by the perceived pussyfooting approach of the EU heavy hitters to the struggles of Greece actually to implement a rolling programme of austerity.  The grim reality of what was involved for ordinary people when Argentina defaulted, or when the Russian economy collapsed, has had little airing here. What happened in a remote country far away could never happen to Ireland!  Sadly, it could.

Here again crystal ball gazing can prove difficult. The international economy may well  go into meltdown. As the cliché would have it we are now in uncharted waters. And if the world economy does collapse the next generation of economic commentators and pundits will point to the events of the last three years- since Lehman collapsed – and will conclude that the signs were there for all to see, that there was  a sequence of events almost teleological in nature which brought about the collapse. Frankly the only things  clear at the moment are that the future is a hidden book and that the major  political leaders worldwide are agreed only on their fear of the unknown and what the future may bring.

Much can happen in a year. But events move in flux and do not fit neatly into a rigid timeframe. Greece may well default over the next twelve months, but the process will have begun before and the consequences will  persist after that year. Ireland seems to have bottomed out economically in some respects but the when and how of recovery is contingent on many factors. We may get a helping hand  – Eurobonds or a common Eurozone debt have been talked about. There has even been reference to the origins of the Dollar. But political problems remain – almost as formidable as teaching a horse to talk.

YOU READ IT HERE FIRST

Hemingway’s  comment that people go bankrupt slowly at first , but then speed up, is beginning to have a certain resonance in Ireland. Ireland’s developing mortgage crisis, about which I first wrote in August 2010, has moved firmly to the centre of the political stage over the last few weeks.

The writing has been on the wall for some time but the latest quarterly figures have concentrated minds,  on the problem at least. At the end of June,  55,763 residential mortgages were at least 90 days in arrears (7.2% of the total), with 40,040 over six months in arrears. A further 69,837 mortgages had been “restructured”, i.e. some deal had been worked out between lender and borrower, whether switching temporarily to interest only payments,  lengthening the mortgage term, or some other form of (temporary) relief for the borrower. In other words, roughly one in seven mortgages are running on empty.

Those affected are not sub-prime borrowers. Cut backs, short time or the loss of one or both household incomes has left thousands unable to meet heavy mortgage commitments entered into when credit was cheap. Selling is not an option as the property market has dried up and any property bought since 2002  is in negative equity. The debt left after resale – even were that possible – would remain as a burden on the borrower.

None of this is new. I wrote about the potential consequences last year, when  the number six months in arrears was around 25, 000, pointing out that it was extremely unlikely that any economic recovery would come quickly enough , or be extensive enough, to throw them a lifeline. I asked whether Irish society could deal with 25,000 repossessions, evictions or bankrupcies and forecast the issue would come to a head towards the end of 2011.

The last government was grappling with more pressing macroeconomic problems and confined itself on mortgages to postponing the day of reckoning. It encouraged a moratorium on repossessions and negotiations between the principals, kicking the can down the road in the hope that  something would turn up. An “expert group” reported but ruled out any form of debt forgiveness.

Well, nothing has turned up and we are now edging towards the end of 2011. The number six months in arrears is 50% higher. There is no economic recovery in sight. The number of repossessions and court proceedings remains low, but is increasing. Interest rates have risen. The mortgage issue has now reached the critical mass at which it becomes a focus for public attention.

Moreover, the public mood has changed, battered by three years  of belt tightening, with even more to come. The middle classes are now being affected. People who could comfortably cover their mortgage repayments this time last year are now struggling to cope, have exhausted most of whatever financial fat they might have had, and are now worrying about what will happen next. And these are the ones who are actually paying their mortgages.

The public have also realised that kicking out Fianna Fail has solved little. The economic mess remains. The realisation is dawning that after the excesses of the Tiger era we have, collectively, to bite the bullet of harsh fiscal measures to restore the public finances. The issue now is who pays what, in taxes or cuts and what has become very clear is that everyone will  seek to hold on grimly to what they have in what is seen as a zero sum game. So far the new government has had broad support but the next three months will see it’s mettle tested, when it has to announce further cuts and tax increases.

The options over the mortgage issue remain unchanged from last year . Do nothing and watch the problem grow; it has. Encourage dialogue between lender and borrower to “restructure” the mortgage, in effect a type of temporary placebo, leaving the debt unaltered in the hope that something will turn up; this has been  happening – but to what end, apart from staving off repossession (i.e. eviction), and for how long? And nothing has turned up.

Deals of a permanent nature, with the bank agreeing privately to write off some of the mortgage debt (i.e. whatever is left owing after the property has been sold and the debtor squeezed of any other assets) are also reportedly happening in a small number of cases. This is currently being touted as the least bad way forward. But how realistic a solution is this unless the banks are leaned on, heavily? What is in it for them?  Disposing of properties at even 50 % below the peak price is not easy, with would – be purchasers finding credit difficult to get.

The elephant in the room remains debt write-off; “forgiveness”. The battle lines were drawn on this one last year as well. Those who are paying their mortgages (five out of six), or who have no mortgage, are clearly unwilling to agree to bail out those having problems. Any official endorsement  of the concept carries with it the obvious risk of a stampede to take advantage and the sheer impossibility of separating the can’t pays from the won’t pays. Who would continue to pay if they could avoid it ?And, overlaying this is the grating cloak of moral superiority worn by many of those not affected.

The government knows it must do something (40,000 repossessions are simply not on). The  report of another expert group is imminent,  after which some action can be expected. But what? Ministerial pronouncements have concentrated on the need to preserve the family home – but most of the mortgages in difficulty are family homes – maybe not the dream home but the place of abode just the same. There is certainly no talk of doing anything to help those who bought investment properties. Will families be helped rather than young singles or childless couples? These are thorny issues indeed.

There is no neat solution. The cost of the bank bailout – corporate debt forgiveness with a vengeance – has snookered the government financially. One leading player remarked to me several years ago that “We had to get the banks moving again”. It hasn’t worked. Except in so far as they have been resuscitated to resume their more objectionable practices. If people overborrowed, the banks were equally complicit in over-lending. The public perception is that the banks have weaseled out of their co-responsibility.

This is surely the time for some lateral, and tough, thinking . They are our banks, bought metaphorically with our blood. The housing market is shot. The property escalator does not function. This paralysis extends beyond those in mortgage trouble. The banks have a key role to play in the economy, granted. But  the government has a much greater one and has society as a whole to consider. One thing is certain. The situation will not improve if left to the banks; their dismal history demonstrates this.  A new body with powers to compel the banks to negotiate equitably has been mooted. The government should ensure that any such body is properly empowered and resourced.How the government handles the mortgage issue could be one of it’s defining moments.

THE BIG PICTURE … AND THE SMALL

A silly season story to make you weep. Retiring employees of FAS, the already discredited Irish  state training agency, receive up to seven weeks extra paid holidays during each of their final two years, to help them prepare for retirement (!) No wonder Ireland’s economic situation is sometimes characterised as critical but not serious.

The Big Picture is now with us. In the context of the tremors coursing through the world economy, Ireland’s economic problems, real or otherwise, represent small beer indeed.  Who can tell what will be the outcome of the current world wide economic upheaval? Will the international economy stutter on? Will the euro survive? Politicaly, what will happen in the Middle East? Will democracy prevail – eventually  – in Libya and Syria? What then? Will the Arab Spring spread to the Gulf, to Saudi Arabia? Will the pundit who forecast that in a year or two the southern rim of the Mediterranean would be one Islamic state be proved correct? And what about the price of oil?

Thus far the big picture has helped . The need for Europe’s big states to focus on protecting the Euro has subsumed Ireland’s problems into the bigger euro whole ( w optional!). The immediate interim solutions, a second bailout for Greece and moves towards new fiscal mechanisms, have, as a by-product, lowered the interest rate payable by Ireland  on monies borrowed. The government has been handed, on a plate, one of it’s chief election commitments. The net effect will be a saving of $1 billion plus annually on interest payable, giving slightly more wiggle room  on the financial bind. (The saving does not mean more money; merely that the cost of our ongoing borrowing  simply to run the country will be slightly less.)

It must be comforting for the Government, just six months in, to have this international economic background as a fallback. There is still mileage out of blaming Fianna Fail for the domestic situation and the harsh measures pending, but there is now the added comfort of external economic factors. Should the Irish economy continue to stagnate, and unemployment persist at current levels, the international economic uncertainty can be cited as hindering recovery. Moreover, the praise and plaudits we are receiving internationally for policies pursued are encouraging. If we could only factor out thecost of the bank  bailout, we would be well on the way to recovery. If only!

The saving on interest will not go amiss. For even if so far Enda Kenny seems blessed with Napoleon’s sine qua non for a general – Luck – the third hundred days of the coalition promises to be interesting. At the very least the government has to find $4.5 billion in extra savings in the December budget and who knows what else may be lying in the economic long grass out there (last year $5 billion morphed to $7 billion after September, which proved the tipping point necessitating IMF intervention). A formidable enough target in itself but made more complicated by a mystifying commitment, celebrating 100 days in office, by Kenny and his deputy and Labour leader Gilmore, not to raise income tax or cut welfare levels to achieve the target.

Given this commitment, just how the target – an IMF one –  will be met is unclear. Perhaps the Government  believes its luck (and public support) will hold. This is a dangerous strategy. The money has got to come from somewhere. Presumably some form of semantics will be employed , changing tax bands, changing age or income levels for benefits, a slew of stealth taxes, but the net effect will be to damage seriously the government’s reputation for transparency. This has already taken one blow over Roscommon Hospital, where a needless pre- election commitment was given.  The strategy should surely have been to take the harsh measures every one knew were necessary early on in the government’s term and blame it all on Fianna Fail.

The fallback strategy, to blame the IMF, already used to excuse the new property levy, cuts less ice and is less effective politically. There is every danger that the brief opportunity for the new government to dent decisively the  public sense of entitlement and regenerate the political system and culture will be lost. Already voices can be heard complaining that they “voted for change” and asking where is it, as if the economic mess could be banished by simply casting a vote.While most people recognise the seriousnes of the situation and the need for firm and painful action, the danger in delay is that impetus will be lost. As time passes, and as further harsh measures are introduced piecemeal, the fickle finger of blame could quickly redirect  at the government.

There is no doubt that Fine Gael feels it has to tread with care lest it frighten the Labour horses. Labour for its part has its own frightened horses to worry about. The unprecedented number of new Labour backbenchers is both a blessing and a curse; great to have the numbers but a slight loss of support could lose those seats next time round. The new backbenchers are very much aware of this, and of the radical left snapping at Labour’s heels. The recent election showed the punishment that an angry and disillusioned electorate can hand out.

While all this is true (and also applies, mutatis mutandis, to the Fine Gael backbenchers), there is surely a stronger case to be made in the current situation for the tactics of Machiavelli rather than Fabian the Delayer, i.e. get the harsh measures over quickly.  Whatever the outcome on the world macro- stage, the problem of the budget deficit on the Irish micro-stage will remain and this cannot be solved without pain.

The first strains on inter-coalition relations  should come later this month when the comprehensive review of government expenditure is due. Granted that the Minister in charge is a Labour Minister, nevertheless any proposed cutbacks in spending, to help meet the IMF target, are likely to impact more on Labour supporters and support and lead to some soul-searching in the ranks. A toe to toe battle between the two parties in the October Presidential election would also not improve matters, though as I write it is not clear what the final line-up of candidates will be.

The mood of the electorate should also be watched.While there has been a healthy dose of realism up to now, as evidenced by the muted reaction to the medicine the public has had to swallow (unlike Greece, there has been no rioting in the streets), this was accompanied by a grim resolve to punish those deemed responsible, as Fianna Fail found out. However, into Year Four, with more screw-tightening in prospect, the cumulative effect is mounting,  with many hitherto unscathed (including sections of the middle class) now being hit.

The potential for grievance developing is rising. Revelations such as the FAS one do not help, nor the fact, underscored daily, that everyone will hang on doggedly to what they have. Ultimately so much depends on international developments that  the Government should be careful lest what it does, or doesn’t do, makes matters worse.

SOMEBODY OUT THERE LIKES US

Despite our economic woes somebody out there likes us and wants to come here to live! The very first results of the 2011 census have appeared – the headcount. They show that the population of the republic has risen to 4,581,269, an increase of 340,000, or 8.1%, since 2006. The size of the increase came as a surprise to officialdom, exceeding estimates by 100,000. It would appear that, in addition to a high birth rate, more people arrived and stayed and fewer left than had been thought. Given that even now living standards here (and the social welfare system) compare favourably with those in Central Europe and the Baltics, let alone the third world, should anyone have been surprised?

The 2011 figures suggest at the very least that one of the common official assumptions concerning inward migration needs revisiting, i.e. that many of those who came “for work” during the Tiger Years would leave when the economy imploded. Certainly some have, and the number arriving has diminished, yet many more have stayed. The actual figures will not become clear until more detailed data from the census becomes available next year, but recent contacts and exchanges I have had with just three embassies in Dublin paint a very interesting picture. The myth of the mobile transient Polish building worker needs to be put to rest.

There are now probably 200,000 Poles living in Ireland, anything up to 100,000 Lithuanians and 30,000 Latvians. These three nationalities alone now comprise 7% of the country’s population. Anyone who has been an emigrant, or is familiar with the pattern of Irish emigration over the years will not be surprised, given the numbers who came to Ireland from 2004 on. Once the emigration pain barrier of several years has been reached, experience suggests that a good proportion of immigrants will stay, put down roots, develop relationships and start families. These people are not going anywhere.

Similar considerations apply to the 75,000 immigrants from three other Central European EU states -the Czech Republic, Slovakia and Hungary, who arrived here  during the boom ( to end 2008). It’s fair to assume that they have stayed on in much the same proportion as the others, i.e. anything up to 50,000. Moreover, though the numbers arriving from these six EU states have declined sharply since 2008, PPS registrations for the six (our equivalent of social security numbers) in 2009 totalled 26,000, in 2010 18,500 and, in the first five months of 2011, 6000. Poles continue to register at over 100 per week. Again, it is reasonable to assume that most of these late comers, who came with their eyes open, post-boom, are still here.

These EU migrants had one other thing in common – no restriction on the right to work in Ireland. People from non-EU countries, and Romania and Bulgaria after 2007, require work permits, and, in terms of receiving  welfare benefits, must meet the criteria for “habitual residence”  regulations introduced by Ireland and others of the “richer” EU states after 2004 to combat welfare shopping by immigrants ( and, incidentally, applied to incoming Irish citizens and returned emigrants). The total number of new work permits issued to all nationalities in 2008 was 8481, declining to 4024 in 2009 and 3394 in 2010. Romanians received just under 1100 of these.

Nevertheless, 22,000 Romanians received PPS numbers in 2007 and 2008 and a further 5,500 in 2009 and 2010; around 1500 have done so this year. The figures for Brazilians (who received slightly over 500 new work permits since 2008) are even more startling. This is a non – EU state with which Ireland has few historical or trading links (unlike Argentina, where there is a large population of Irish descent). Between 2006 and 2008 almost 14,000 Brazilians received PPS numbers, in 2009 2741, while the figure for 2010 was 4257 (as against 143 Argentinians). To date in 2011 2553 PPS numbers have issued to Brazilians, almost as many as to Poles. Again, presumably most of the latest arrivals plus a good proportion of those who have arrived since 2007 have stayed. Ditto with regard to those coming from third world countries, roughly 8000 in 2010. The message is clear. Despite our current economic difficulties, Ireland continues to be attractive to those coming from poorer societies.

To complete the picture there is more affluent immigration also and, all told, in 2010, around 70,000 PPS numbers were issued to non-Irish people (the 85,130 issued to Irish people were, with a few exceptions, to babies), a rate being maintained this year, despite the economic situation. While emigration has picked up the net inflow continues and, as the census has revealed, its extent has been underestimated.

The consequences of continued strong inward migration have received little public attention. While there was considerable coverage and hand-wringing over estimates of up to 50,000 young Irish people emigrating last year, there has been little or no focus on the fact that 35,000 plus arrived here last year as economic migrants. Clearly should this trend continue, on top of the current situation, it will add considerably to the problem of tackling unemployment, still stubbornly high at 450,000.

The recovery of the 90s took place initially with no inward migration, a static or declining population and a work force in which women were underrepresented. This has now changed utterly, and, while there are almost daily announcements of new jobs in the multinational sector, they are not impacting on the total out of work. Like Spain, Ireland may be entering a period with chronic high levels of unemployment compounded by immigration and, in Ireland’s case, a demographic  structure which promises a continued high birth rate.

The detailed breakdown of the population by age, nationality or ethnic origin etc. will become clear as more of the census results become available, but, generally, more people means more pressure on resources. At a time of financial stringency this will cause the state some headaches but there is  one potential silver lining. More people also means more demand, including for accommodation, so an economic recovery should see a surge in demand for housing, helping to solve the overhang of excess housing units and correct the current imbalance.

Having a sizeable percentage of the population non Irish raises other issues, which were pointed to in the 2006 Census, but which are likely to become more pressing. Not least of these relates to democratic representation. Only citizens can vote, but any review of the Constitution (which is being mooted) can hardly ignore the issue of the vote for non-nationals. The issue of multiculturalism also needs addressing in a more coherent way than up to now. The data from the Census will be critical in this regard.

Some historical perspective. The current population figure of almost 4.6 million is still far short of the 1841 total of 6.5 million for the 26 county area, and, while the population of Leinster is now one third higher, the population of Munster is a little over half the pre-Famine level, while those of Connacht and Ulster are 60% less. It will take a lot more inward migration to dent that shortfall.

REALITY CHECKS

The government must feel empathy with the tourist in the old joke whose request for directions from a yokel produced the response “If I were you I wouldn’t be starting from here.” No indeed. The economic straight jacket is bad enough – and looks set to get worse. The mortgage crisis is pending. Crunch time for dealing with the public sector approaches. The first Hundred Days are passing – and let’s not forget how the original Hundred days ended!

However, as days pass there are some signs of a growing sense of public realism. While distractions continue, such as demands for public enquiries, not only on the bank bailout (2008) but now the ECB/IMF bailout (late 2010), the hard edge of our situation is now penetrating. The election may prove to have been cathartic, in that, having got rid of Fianna Fail, the public is now stuck with its choice.

Here the signs are encouraging. The job of the government is to govern, and, at this time the general mood is to look to the government for solutions. The government, and in particular the Labour ministers, have been quite unequivocal in their statements about the tough road ahead and the lack of soft options. There are also promises of real reform and there is some hope that the era of hand wringing (“we can do nothing because…”) may now be over. The medicine may be unpalatable but at least it will be administered.

One illusion has suffered a stake through its heart – the fairy tale from the left (and, indeed, the ultranationalist right) that Ireland had a metaphorical pot of gold waiting in the form of offshore oil and gas reserves. Figures of $ 100 billion and up have been bandied about in recent months by Sinn Fein and the rest of the left as waiting to be harvested as soon as we got tough with the oil companies. Never mind that the one proven and commercially viable gas field, the Corrib field, has been on hold for a number of years over local and environmental protests; the offshore reserves have been touted as the magic bullet for Ireland’s budgetary and debt problems. The myth was forensically demolished in a speech by Energy Minister Pat Rabbitte in the Dail on April 16.

The speech, which can be googled easily, merits a closer look, if only to drive the message home. The seas round Ireland are not another North Sea. There are no 10 billion barrels of oil equivalent awaiting exploitation. The figure is an estimate of what might be present and what might be found, based on geological criteria and regional comparisons. It would take hundreds or thousands of exploration wells, at $125 million a time, to discover if the estimate is accurate. The process alone would take 10 or 20 years to yield any financial benefits. In the North Sea, 1200 exploration and appraisal wells have been drilled in the Norwegian sector, and over 4000 in the British sector; 156 in total have been drilled in Irish waters. There are 300 plus producing fields in Britain, three in Ireland; the Norwegian Troll field is 50 times bigger than Corrib.

There is no conspiracy not to drill in Irish waters. The oil industry is a global one which bases decisions on exploration primarily on geology and economics. To date there is no evidence to suggest that, where the prospects are high, the multinationals will walk away. Indeed Norway and Britain both have higher rates of taxation on oil and gas revenues than Ireland. There is an element of Catch – 22 involved at present; without more exploration the petroleum potential of the Irish offshore cannot be proven, but until more commercial discoveries are made, it will continue to prove difficult to attract new exploration.

Reality checks of a different kind have come with revelations about some of the salary levels, and not just at the top, in the state-owned commercial bodies, the third part of the Irish public sector. The civil service and bodies including the police, teachers and health workers form the other parts; crucially their pay and conditions are monitored or controlled by the Department of Finance. Not so a number of the commercial bodies. The argument is that, since they are out in the big bad commercial world, and are making profits, their staff should benefit, as staff in a private company would.

Fair enough, but some of the companies are monopolies or quasi – monopolies, which certainly do not operate in a free market situation. Take the energy sector. It is dominated by two state owned enterprises, the ESB and Bord Gais; the electricity grid is run by another state company, Eirgrid. The 2009 average salary of their employees – including cleaners and bottle washers –and including also pension payments made by the employers (i.e. the taxpayer) were, respectively, $125,000 (ESB), $100,000 (Bord Gais) and $129,000(Eirgrid). Prices for Irish domestic electricity are among the highest in Europe and the companies were criticised last year for not being slow cutting off those who couldn’t pay.

Elsewhere there are considerable variations in salaries paid, ranging from an average of $170,000 in the case of the Irish Aviation Authority (which includes air traffic controllers) to around $65,000 in the case of the transport company CIE.  For those at the top the news is even better. Chief Executives in the state bodies had salary packages in 2009, including pension contributions, ranging from $450,000 (Dublin Port) to $1 million (ESB). This despite an attempt to cap or cut these salaries; in a number of cases, while salaries have held steady, other elements in the package, such as pensions, have been hiked.

The government is now to review salary scales across the whole semi-state sector, many of which have so far avoided the cuts and pension levies imposed on the rest of the public sector. Indeed ESB workers actually received pay increases under a fanciful “national pay agreement”, now moribund, in 2008, even as the country slid towards crisis. There was at least a suspicion that the last government at the time ducked a confrontation with the powerful ESB unions lest power cuts and disruption to industrial production be added to the developing economic woe. It will be interesting to see how this one develops. One thing is for sure; there will be little sympathy for ESB employees in any future clash.

Meanwhile new figures from the banking sector show that bank executives continue to receive large salaries even though the banks are on life support from the taxpayer and the ECB. At its crudest, cuts in the numbers of special needs teachers are paying for six and seven figure salaries for bankers. If there is a lesson from these and other revelations, including special pleading, it is that no one is going to yield what they have willingly. This could make the government’s job on the fiscal issue actually easier. When only belt-tightening all round will restore balance to the public finances, the more groups seek to protect their privileges at a time when others are hurting, the more support there will be for resolute action by the government.

NURTURING THE ELEPHANT

Of all the misleading balderdash written about the European Union, pride of place must go to the claim that the Union brought peace to the European continent for fifty plus years after World War Two. It did NOT. After 1945 and until 1989 the military borders in Europe calcified into political borders separating the two competing superpowers and their allies. The leading Western Europe states were very much second division and would not have been permitted to fight each other, even had the desire or the means been there.  As time passed economic reconstruction and cooperation ushered in an era of prosperity out of which the European Union developed.

This is not to deny the many achievements in Europe since 1945. The European Union and its earlier versions have contributed a great deal to the peaceful and prosperous Europe we have today. Ireland has benefitted enormously from membership and continues to do so; indeed the EU is currently supplying us with economic life support. But now, as the EU faces perhaps its greatest challenge there is a need for cold dispassionate analysis of where we are at and where we are going. Any “Post hoc ergo propter hoc” line of reasoning and the mind-set that encourages it should be avoided.

I wrote last July, in the context of the developing crisis in the Eurozone, of the gradual emergence of a European super state built around Germany. This entity was still in embryonic form, its institutions and even its borders were evolving; it had taken a particularly significant leap forward in 2001 with the launch of a common currency – the Euro. All this happened over time and on an ad hoc basis rather than as part of a master plan. Certainly people from Schuman on down had had dreams of a united Europe but no one had any idea how it would pan out in reality. What we have now is a peculiar institution. And, as the Eurozone crisis has deepened, this institution is entering uncharted territory.

The crisis has exposed a weakness at the heart of the European project. You can have a customs union. You can have a free trade area. You can have a common travel area.  You can even legislate Europe- wide across a broad range of social and environmental issues under powers delegated by the member states. But you cannot have genuine economic and monetary union, embracing a common currency, without a supranational  political and fiscal authority with comprehensive powers to discipline and override individual member states. To date member states have been loath to give up this fundamental facet of sovereignty. There is, frankly, little sign of this situation changing.

The immediate major practical issue is whether the bailouts provided to date to Greece, Ireland and Portugal will enable the three countries concerned to meet their financial obligations without wrecking their economies in the process. The ECB and the heavy hitters of Germany and France remain firmly opposed to any restructuring of debt through altering the calendar or through writing off some of the amount owing. Whether that resolve will survive for much longer is for debate. Last year’s sticking plaster solution for Greece has proved inadequate and the Greek situation needs to be addressed urgently and definitively. This may not be possible without a fundamental restructuring of the Euro project.

The Euro was launched in 2002 on a wing and a prayer, with much pious waffle and fiscal and administrative controls that proved to be aspirational rather than binding when the going got tough. The first countries to breach the 3% deficit guidelines (albeit mildly) were Germany and France; they got away with it, something which did not go unnoticed. And, (shades of Ireland’s situation writ large) as long as the world economy was doing well, the growing imbalances and contradictions in the system could be glossed over. With recession all this changed and the weaker economies found themselves beached and exposed with large borrowings and rising debt.

Whither now? The usual European muddle through may not work this time. Policy is in flux and is being  made largely on the hoof. The European banks which provided the easy credit are exposed and would lose out in any debt restructuring or write-off. However, default by one or more countries could collapse the whole house of cards with consequences even more dire. Europe has a habit of doing too little too late when faced with a problem until at the eleventh hour some solution, usually temporary, is found and the system staggers on. What will emerge and will it work this time?

Ireland waits with interest. Emotions are rising here as the message sinks in that even a change of government has not altered the fundamental economic reality. The gathering head of steam in Ireland is focussed firmly on the ECB and (largely) Germany as being to blame for not reining us in during the Years of the Tiger, with our own tiger excesses being ignored or dismissed. There is talk of restructuring or even reneging on some of our debt though there is enough cautionary evidence and opinion around to counsel against this. Our immediate concern is to secure some relief on the interest rate we are paying on our bailout..

Some have suggested even deeper budgetary cuts here, to bridge the fiscal gap at one or two fell swoops. (This would be the de facto consequence of any reneging on debt, since we would immediately have to live within our fiscal means.) Yes,  an immediate 25% cut in government spending, including all public sector wages and welfare payments, combined with some sharp increases in taxes, could, by eliminating our current budget deficit more rapidly, give us the leeway to thumb our nose at the ECB, the IMF et al. Given that politics in a democracy is very much the art of the possible, the chances of this happening must be remote.  The government has little option but to soldier on and see what Europe can do.

In fairness, the task facing Europe’s leaders is colossal. Consider the much less complicated situation in the United States in 1790. The new country had no money and faced a huge debt from the revolutionary war. Some of the states had paid off their debt, others had not. Alexander Hamilton, First Secretary of the Treasury, proposed that the new nation assume all state debts and fund them by issuing new bonds. There was a North – South division, with up to 80% of the debt owed to Northern bondholders, many of whom had bought the debt at 10 or 15 cents to the dollar. Congress was deadlocked for six months with sectional animosities mounting. Eventually a compromise was hammered out with Hamilton’s plan being adopted at the behest of Jefferson and Madison.  To put it mildly, the plan worked.

The question is not whether Europe today needs a Hamilton but whether there is a spirit of compromise and statesmanship around sufficient to enable Europe’s leaders to agree on a fair and equitable solution for all its citizens. Without such a solution the EU’S future does not look great.

PLUS CA CHANGE

The new government needs some luck, and, frankly, much of what is on the horizon appears bad. I have just returned from the south of Spain, where one could almost hear the shouts of outrage from Ireland over its announcement on recapitalising the banks. After reflection, best judgement was that, rather than “burn the bondholders”, another $30billion would be thrown at the banks. A Labour Minister promised that the government would act in the best interests of the country, echoing words of the former government. Déjà vu, anyone?

The howls came loudest from those who had switched to vote Labour, now swearing never again. In truth the government had little choice, just as it faces the fiscal future with very little room for manoeuvre. The honeymoon period, such as it was, is now over. The sniping from the left is likely to intensify, to the growing discomfiture of Labour. Fianna Fail remains, defeated but still dangerous; however, it is unlikely to recover until there is either a major government faux-pas or a further significant worsening in the economy brought about by some external force-majeure.

The public’s anger has now focussed on “Europe”, a term encompassing Germany, France, the ECB and the European Commission. All are deemed culpable in varying degrees, by: a) not controlling Ireland’s financial regulator and institutions, b) allowing their national banks to invest in the Celtic Tiger bonanza, c) refusing to countenance making the bondholders pay lest their banks suffer losses, d) refusing to cut a deal on our repayment terms, lest their electorates object to paying for us, and e) a general refusal to accept Ireland’s special case.

We have not yet reached the stage of calls that our involvement with Europe should be seen as some form of Faustian pact, i.e. we got all the goodies early on, but now Europe is costing us, is harming us and is inhibiting  our manifest destiny (whatever that may be). Yet there are already disturbing suggestions from the opposition and the public that we use our veto or threat of default to get our way (1% of the population of the European Union to determine what the other 99% does).

The phrase “eaten bread is soon forgotten” comes to mind. Ireland has benefitted enormously from Europe in terms of market access, huge financial transfers (the CAP, Regional and Structural Funds), a benign approach to our corporate tax regime, and much else. European social, environmental and human rights legislation has had a defining role in shaping contemporary Irish society. Furthermore, rightly or wrongly, Ireland chose a particular path in abandoning sterling 30 years ago and, later, in choosing to join the Euro, which we did with our eyes open, though much of our trade was outside the Eurozone.

There is some, but not much, justification for blaming “Europe” for not overseeing sufficiently closely Irish banks’ reckless lending (and borrowing!). The EU is not after all a fully integrated entity like the USA and the centre relies on national governments to micromanage policy. If there is a criticism to be levelled it is that, in instituting something as major as a new currency, there should have been greater care and attention to detail in advance as well as a stronger and more intrusive regulatory regime. Yet this is not the way the EU has worked to date.  And had Europe intervened, during the Years of the Tiger, there would have been a chorus of “hands off” and shouts about attacks on our sovereignty.

The two major quantum leaps taken by the EU this century, Enlargement and the Euro, were, above all, political, and were taken after some but not necessarily sufficient preparation. EU practice has been that institutions are tasked or shaped to give effect to political decisions made. If tweaking is needed there is tweaking. If heavy lifting is required there will be heavy lifting; but this takes time. Up to now the system has worked and Europe has muddled through various difficulties.

It is evident that the Eurozone is currently in a deep crisis and that Ireland is a component in that crisis. The scale and depth of the crisis were not anticipated with some commentators suggesting there is more and worse to come. Right now Europe is struggling to find a solution, for both the short and the long term. This is a process and could last for some time. Irish politicians, commentators and the public have been less than enthused about progress to date. But there is still some way to go. In the meantime the European Central Bank is keeping our economy afloat. We would do well to keep this in mind.

Domestically there are some indications that economic growth is back, with exports rising and surveys among business showing more optimism than pessimism. Indeed there is a functioning economy out there, with hundreds of thousands more employed than ten or fifteen years ago. Anyone who doubts this should compare the traffic flows now with the late 90s, and, despite all the doomsayers, consumer spending is around 2003 levels – which were far from bad.

However, little impact has been made on unemployment levels, the banking system is moribund (apart from bullying small and medium debtors), interest rates and energy prices are rising – inhibiting the rate of economic growth – and the sands of reckoning for personal and mortgage debt are fast running out. Throw in the rising cost of servicing our debts just to keep the country running and it is clear that the target of cutting the budget deficit to 3% in any reasonable timeframe is achievable only by drastic cuts in spending or increases in taxation or some combination of both. The dynamics of a left/right coalition suggest that anything too radical will fail.

And that is not the worst of it. The mortgage crisis is moving inexorably towards centre stage and seems set to concentrate the governments mind later in the year, particularly given that those affected are middle class, and thus more likely to create a fuss. The situation has worsened since I wrote several months ago about the prospect of 25,000 plus mortgage defaults and repossessions (i.e. evictions), with scheduled interest rises over the next year set to compound matters. Up to 10% of mortgages are reportedly either in arrears or the subject of temporary special arrangements. The last government sought to postpone the issue by kicking it down the road through palliatives (a moratorium on repossessions) or a sticking plaster solution (a code of conduct, etc.).  The problem cannot be ducked for much longer, with voices already querying how the banks, which “we” own, can be allowed to pursue mortgage holders.

May promises some relief, with visits by the Queen and Barrack Obama, both offering potential spin off in terms of publicity and tourism. The government is also scheduled to launch its job creation programme, though how exactly this is to be financed is not clear. That, plus some confidence building measures, is about all the government has in its locker. A move from Europe, however small, would be very welcome and would underline who our friends really are.

BE CAREFUL WHAT YOU WISH FOR

A rare near-consensus was achieved in the February General Election. It was not about how to solve our economic problems. It was about punishing the outgoing Fianna Fail government; and it did just that. Fianna Fail got a severe kicking, losing three quarters of its seats and more than half its support (and colour the Greens gone). In terms of the stages of bereavement a sizeable portion of the Irish public is still at the anger stage.

Whether the results overall represent a watershed, as some have trumpeted, remains to be seen. The Fianna Fail vote which went walkabout seems to have split along class lines with Fine Gael picking up the middle class element, Labour the working class portion and Sinn Fein the republican vote; independents picked up the rest. More people voted than ever before, some colourful independents secured election and Sinn Fein and left wing elements claimed major advances. Yet Sinn Fein only increased its share of the vote from 6.9% to 9.9%, while the United Left Alliance polled 2.6%; hardly ringing endorsements. More people actually voted for the large and heterogeneous number of independents than for both these combined. And almost three quarters of the electorate voted for the three mainstream parties.

The new government, a Fine Gael – Labour coalition, faces formidable economic challenges. What price the possibility that, in taking the hard measures necessary to rescue the economy, it will so alienate public opinion that it will in its turn become unelectable? When the dust has settled the grim reality of how to bridge the yawning budget deficit – still running at $500 million per week – will remain. Indeed, between the dissolution of the last Dail and the convening of the new one, over $2 billion had to be borrowed just to keep the country running. You would never have thought so to listen to the election chatter.

The election campaign was dominated, not by the critical issue of the budget deficit, but by the important but secondary issues of the blame game, the deal with the IMF and the ramifications of the bank bailout. The major parties recognised how little room for manoeuvre the next government would have (“we’re snookered”, as one Fine Gael T.D. remarked to me). Their election manifestos fudged on the economic issues while focussing on proposals for political and constitutional reform – hardly national priorities at present.  Some of the electorate seemed to think that the problems would be solved merely by electing a new government (with one bound our hero was free!).

The maximum to be hoped for in negotiating on the interest rate on the IMF loan would, while welcome, only run the country for two weeks, $ one billion or so. Any early favourable outcome of the current negotiations in the EU aimed at restructuring the finances of the Euro, (i.e. some debt relief for Ireland), again, will not alter the underlying reality.  Ireland’s expenditure exceeds her income; until that is put right we must continue to borrow and we can hardly expect to be loaned the money interest free. This is the stark fact.

The new government programme at least recognises there is no quick fix. However it is short on the specifics of how to tackle the deficit, and in particular seems to give hostages with regard to maintaining many current levels of welfare payments and ruling out tax hikes. The impression given is that, to secure agreement, most of the compromises were made by Fine Gael. How the programme will pan out remains to be seen. The toxic nettle of pumping more money into the banks – part of the agreement with the IMF but not acted upon by Fianna Fail – has to be grasped urgently. For this and other unpalatables the ultimate fall-back position may well be to rely on the EU/ IMF to hold the government to the letter of the existing agreement.

The benign scenario in the short term is that there will be tangible early success in terms of results achieved in renegotiating the interest portion of the IMF deal, which, however slight, can be presented as a victory. This to be accompanied by some interim fig leaf formula concocted out of the negotiating work- in- progress in Europe, sufficient to give the government a breathing space.  Again, plausible; our European partners have little to gain in pushing us to breaking point. Then, in the course of the “Hundred Days”, rapid enactment of some of the eminently sensible suggestions on the table such as reducing VAT, giving PRSI reductions for new employees, binning the travel tax and others. Such measures would have minimum impact on government revenue and could stimulate the economy and begin to restore confidence.

The recovery after 1987 is sometimes cited as an example, if not a blueprint. Yet it was based in part on agreement among the social partners on what needed to be done. The ruinous cycle of high taxes, high wage demands and high inflation was successfully reversed. The then government also struck it lucky, with Irish industry particularly well placed to take advantage of a global economic boom, and with success beyond expectation of the Financial Services Sector. Moreover, while public debt was proportionately higher than the current levels, private household debt was much lower and there was no banking or mortgage crisis.

The positive factors of 1987 are not present now. While more necessary than a generation ago, it will be much harder to generate any social partnership with nothing in the cupboard to offer, incomes pared back, a zero sum mentality, and inflation on the march. Interest hikes threaten in the Eurozone. Any growth in the world economy is likely to be modest, with clear and present threats of steep rises in energy costs against an uncertain political background in the Arab world. Ireland’s comparative advantages of a generation ago are no longer present and we face new and formidable competition for investment from rivals in the EU and elsewhere. Our competitiveness and cost base were seriously eroded during the tiger years and will not be easily restored.

The economic and fiscal straightjacket has left the government with little wiggle room. While much has been made of its large majority, this positive is very much double edged. What it needs above all is to be lucky, or at any rate to avoid bad luck. Any slight economic upturn will ease the pressure on the public finances; fifty jobs equate to €1 million, plus the multiplier effect; but this cuts both ways. There is fudge on how the fiscal gap is to be narrowed. There is an obvious hope that enough can be done to stimulate the economy to postpone the need for a showdown on raising taxes or cutting benefits.

The first hundred days should be manageable. The next less so. The cracks are likely to show in the one after that. The first budget will be a watershed. Will it see a Benjamin Franklin approach that we hang together lest we hang separately?  Or will it be “sauve qui peut”? For Ireland’s sake let us hope the former.

PARALLEL WORLDS

By the time you read this Ireland will have a new government. Given the anger and volatility in the electorate, the only two things one can confidently predict are that it will be a new Taoiseach who will present the shamrock to President Obama on St. Patrick’s Day and that the huge financial challenge Ireland faces will still be there.

In the end it was the little things (Albert Reynolds’s rueful words) which determined when Brian Cowen fell. However blame may eventually be apportioned for Ireland’s current woes, arguably, when the chips were seen to be down, Cowen did not shirk difficult decisions. Unless you walk the walk, can you talk the talk? Brian Cowen successfully put through two savage budgets essential to the country’s economic survival. He also carried the Lisbon Referendum, facing down the neanderthals of the left and right. He might have carried on for a while as Taoiseach had he been luckier in his golf partners. Should the plug have been pulled (or tweaked) on the bank guarantee when it became clear that the information on which it was based was culpably inaccurate? Brian Cowen did not and the rest is history.

Early reports from the election campaign show a widespread public sense of alienation and hostility to politicians generally, springing from the belief that politicians have been living in a cocoon, well paid and with lavish expenses and pension entitlements, and, in short, living in a world parallel to the real world. The attempts by politicians to self-regulate in reining in on expenses and cutting pay and entitlements are generally regarded as derisory. This is an issue that it behoves politicians to heed and address if our very democratic institutions are not to fall into disrepute.

There are other obvious parallel worlds in Ireland today. There are those with jobs and those without; those with mortgage issues and those with none (a moveable feast!), those high profile figures constantly here but “not resident for tax purposes” and those who pay tax here. There are others. Some recent, some around for some time, reflecting the ad hoc approach to problem solving when Ireland was a less complicated and more homogenous society than now. Bringing these parallel entities closer together would seem desirable from the viewpoint of fostering social harmony at a difficult time.

In the health area there are clearly the parallel worlds of those with and without private health insurance. The situation is not as critical as in the USA though it is far inferior to other advanced EU countries which have single tier health systems. In Ireland all are entitled to public health care in hospitals which, once in the system, is extremely good. The rub is getting in – with long delays for public patients to see specialist consultants contrasted with fast tracking for those with private insurance. A roughly 50-50 split up to recently enabled the underfunded public system to stagger on. The rising population, the economic crisis and the rapidly rising premiums for private health insurance have pushed significant extra numbers onto the public system with no extra resources provided.

There is more. Possession of a medical card confers entitlement to free medical treatment, including prescription drugs and doctors’ visits.  Currently roughly one third of the population have such cards. In the main they are issued to those on lowest incomes, though there is discretion regarding some medical and other circumstances; until two years ago everyone over 70 qualified for one; now all are means tested. It is not clear that the most deserving are necessarily catered for by the current arrangements. What is clear is that, for a family of modest means, the card can become a vital element in the household budget. This has created poverty traps on both sides, with an obvious disincentive to the unemployed to seek or get work if the price is loss of the card. The recent budget has made matters worse by reducing considerably the new “universal social charge” levy charged to medical card holders.

The health area is not alone. Elsewhere, through state intervention, two tier systems have evolved. Some seemed to have merit. Thus the abolition of third level tuition fees, progressive on the face of it, and touted as opening academia to all, including the poor. In practice the result has been a significant subsidy to the middle classes, with little prospect for the children of those on lower incomes to get to third level unless they are fortunate enough to live close to (and gain a place in) a college or university. Similarly, access to the law and the legal system, one of the crowning achievements of our civilisation and its core values, is in practice out of reach of the average citizen because of the punitive costs involved in having recourse to law and the limitations of free legal aid.

There is also a new subset within Irish society, that of the violent criminal class. There was always crime of course but nothing on the scale of what Ireland has experienced in recent years. The country is a liberal, tolerant and progressive democracy where a beginning (at least) has been made to addressing inherited societal injustices. Yet side by side with this has grown up a gangland culture, based on drugs and characterised by relatively high levels of gun murders ( Dublin has one of the highest rates in European cities). It is mostly inter – gang feuding, though in Limerick whole communities are intimidated by gun wielding gangs. Gang members, moreover, are often free on bail (and in receipt of free legal aid provided by the taxpayer) when committing new offences, thanks to a legal system struggling to cope and which can best be described as plodding.

Quangos. At times it appears that some of the recently established state regulatory agencies exist in a parallel world where their writ runs with impunity and beyond both common sense and the power of the Minister. Some are undoubtedly necessary but many boast burgeoning bureaucracies and running costs to do what was done formerly by a handful of civil servants. Furthermore there appears to be no happy medium of communication to head off economically damaging actions such as last year’s carbon tax and the upholding of archaic rules on Sunday wages in the catering sector. Ministers wring their hands at these and other activities, pleading their impotence and the independence of the agencies. Really? Who established them? Who governs the country?  Who is tasked with safeguarding the national interest? Will the new government become more pro-active?

One other parallel world which should not be overlooked is that between Irish citizens and the rest. Currently only Irish citizens and British subjects resident here can vote in Irish general elections. Before the Celtic Tiger this did not present a problem, as the numbers disenfranchised were negligible. The arrival of several hundred thousand here to work and live since 2004 has created a new situation. Two years ago immigrants made up ten per cent of the workforce. Many have left with the recession, but many remain. The issue of taxation without representation arises and may yet have to be addressed.