“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.

Mick is founding editor of Slugger. He has written papers on the impacts of the Internet on politics and the wider media and is a regular guest and speaking events across Ireland, the UK and Europe. Twitter: @MickFealty

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