“Snip’ and Nama institutionalise the mindset of property bubble”…

This is kind of where I was heading with the ’empty suits’ thing yesterday. Michael O’Sullivan has an interesting ‘big idea’. First, his evidence for the prosecution:

This anger should be directed at the political and policy making classes, together with some bankers and business people, because programmes like the National Asset Management Agency (Nama) and the “An Bord Snip Nua” initiative are the direct result of the many errors committed in growing, overseeing and, more recently, rescuing our banking system and economy. “Snip” and Nama only institutionalise the mindset of the property bubble and load the costs of this on to the public balance sheet. They mean that we are still in “rescue” mode, at a time when many other nations are moving towards recovery or busying themselves with reform. As a result, Irish people are entitled to wonder how much more pain is to come.

Now comes his argument. So many things about in the way government goes about its business are broke that Ireland needs a second Republic:

First, the behavioural response of those in positions of power and authority to crisis still follows the well-established pattern of dismissal, denial and debacle. There is little evidence so far that the dislocations and challenges produced by Ireland’s economic crisis have brought about a change in mindset on the part of policymakers.

Seán O’Faolain’s statement that “The new Ireland is still learning the old lessons the hard way, like a brilliant but arrogant boy whose very brilliance acts as a dam against experience, so that he learns everything quickly – except experience” sums this up extremely well, though the fact that it was written 60 years ago suggests behaviour has changed little in the intervening period.

The second related issue is the topsy-turvy nature of Irish economic policymaking. In an economy that is expanding too quickly, the normal approach is to try to slow it down; and when it is contracting, the typical response is to support or even stimulate it. In the early years of this decade, our politicians and policymaking “elite” responded to a very “hot” economy by lashing on more fuel. Now they respond to one of the sharpest contractions ever in a developed economy by squeezing harder on the brakes.

And here’s the fulcrum of his argument:

Economic history shows that only when the last bastions of denial have been broken can economic crashes come to an end and recoveries begin. Political history too shows that patriotism, as opposed to nationalism, is associated with an honest examination of a country’s problems.

So the big opportunity here is that…

…that our political class are going to crash land our economy, society and political system so badly that they will break it, and create the opportunity and impetus to renew the institutions of State and build a “Second Republic”.

There is a growing consensus among commentators outside the political system as to what a “Second Republic” should look like – a smaller Dáil that focuses on “big picture” national and international issues; a presidency with more power and resources; the elevation of local politics to the provincial from county level; better-qualified and more accountable local politicians; and an unambiguous legal framework to oversee political corruption and to govern the interaction between commerce and the State. Upgrading the technical skills of politicians and policymakers is vital.

But the Irish are not the French. There is no Irish Voltaire or Jean-Jacques Rousseau to incite the masses:

As a nation, we are not given to broad-based revolt, a characteristic that has contributed to political stability but one that could also mean we follow the example of Japan. Japan’s stagnant political system is only now beginning to show signs of real change over 10 years after its economy deflated and government debt expanded sharply as its property bubble burst.

On a more optimistic note, there are already signs the economic and psychological adjustment in parts of our economy are taking place much faster than in other European ones – notably Spain. Irish entrepreneurship and the confidence and good will built up toward Ireland in the past 20 years have not entirely evaporated. Also, academics and some practitioners in fields like economics and the sciences are pushing ahead with debates on what the Irish economy should look like post the credit crisis.

In the absence of a national strategy or vision from those in power, it looks likely that the new institutions of State may be built slowly, though more surely, from below.

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  • The Raven

    Mick, I think that’s an excellent piece. Perhaps a Second Republic can be a guide for others. I have nothing more to say than that – nice one.

  • alan

    I wonder if the million in the ‘dark’ North will be included in this one?

  • Drumlins Rock

    North South Relationships are going to be very interesting over the next decade as the Southern Government evolves, in many ways they are going through thier “sixties” saying that things arent settled up here yet the leaner meaner Stormont is still probably 5 or 6 yrs away, tempting as it is to do the cut now the new councils should really settle in first.
    I agree with Raven this is an important story for us in the north, and vital to the south, its only starting down there.

  • The Raven

    Drumlin, you touch on the new Councils. I am truly hopeful, not naively either, I pray, that:

    a new class of politician will emerge as the field opens and Councillors can look on politics as a career; I live in an area with one that can barely sign his name – I am hopeful that such people will be swept off the board over the next, say, four elections;

    new powers will be increasingly devolved to larger Councils – much more than the trash they are getting with this current RPA;

    the Councils’ “on-the-ground” role will evolve with fresh politicians and a new engagement with the South will emerge, which lead to an increased all-island culture and economy, our differences – differences I still hold up as something to celebrate – notwithstanding.

    We watch with interest.

  • “As a nation, we are not given to broad-based revolt, a characteristic that has contributed to political stability”.

    Could it be that those who would revolt head for the airports and ports instead and get the hell out of Dodge before the proverbial crap hits the proverbial fan?

    ” (as the masses don’t revolt, i.e. emigrate instead) that has contributed to political stability.”

    Stability? Or corrupt, incompetent business as usual? I suspect the latter. I’m all for maintaining traditions but this is one tradition that needs to be given a swift kick in the arse and sent packing to the outer reaches of oblivion.

  • Davros

    We can’t revolt, think what it would do to house prices!

  • Ho, ho. Funny but true :).

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