The Legacy September 23, 2018 September 23, 2018 the Crash: the Legacy 13
Total Page：16
File Type：pdf, Size：1020Kb
The Sunday Business Post The Sunday Business Post 12 The crash: the legacy September 23, 2018 September 23, 2018 The crash: the legacy 13 FACING DISASTER: not until after our economy foundered, and nearly sank, did we discover that there was no captain guiding the ship long-running failure to provide ade- Te economic crash a decade quate social and affordable housing is being reinforced by a deep distrust in state’s competence and bona fides on the ago was painful enough in its issue. In the US and Britain, a similar phe- nomenon saw angry expression at the own right. But its after-effects ballot box, bringing Donald Trump to power and Brexit to Britain. and the way it was dealt Yet the two seminal votes in Ireland in recent years were not elections, and were not angry. Te huge endorsements with created a loss of faith in for marriage equality and for abortion rights were votes that bucked the trend Ireland’s ruling elites in recent international elections: they were optimistic and generous, and based on trust. Tere is other data to support this have been caused by an excess of trust: story of an Ireland that is hopeful and through ten years of almost-uninterrupt- open, rather than distrustful. In 2008, ed economic growth accompanied by Ireland was ranked by the UN as the soaring growth in property prices, peo- fifth-best place in the world for “hu- ple had come to trust that prices would man development”. Today, it is ranked continue to go up. Tere was no basis for fourth-best. Ireland has the sixth-high- that trust and so, when the shock came, est level of life satisfaction in the EU it evaporated. Te trust of the markets in (according to Eurostat), is the 14th hap- Colin Murphy the banks went first, followed by the trust piest country in the world (according in the state that had backed the banks. to the World Happiness Report), and he word “credit” comes And with that went the trust of the is the second-most accepting country from the Latin “crede- people: in the banks; in the institutions for migrants in the EU, after Sweden re” – to believe. To loan of state that were supposed to oversee the (according to the Gallup World Poll). someone money, you banks; in the government and the polit- So the story is not as neat as one might need to believe they’re ical system that designed and oversaw like. A country that has huge cause going to pay you back. those institutions; and, most dangerously, for social and political fragmentation, Te economy runs on in the fairness of our state and system. and shows some evidence of having trust. Ten years on, Ireland is still haunted by suffered this, is also a country that September ten years ago, the mar- that collapse in trust. Elsewhere, a similar often appears unusually confident and Tkets lost trust in Wall Street’s investment loss of trust (though with distinct origins) open. banks, fearing hidden exposures to losses is crippling politics and threatening the Tat confidence is social, not polit- on the sub-prime property market. cohesion and stability of the social-dem- ical: it is striking how rarely the two Loss of trust is contagious: not simply ocratic state and the liberal international From left: Brian Cowen, referendum successes have been at- because the financial problem may be order. Trust is always a defining feature Brian Lenihan, Michael tributed to political action, and how widespread, but because, in an environ- of our economics; distrust has become Fingleton, Seán FitzPatrick, commonly they are attributed almost ment where other people are becoming a defining feature of our age. Sean Quinn David Drumm exclusively to civic activism, the result less trusting, and calling their loans in, it and John Hurley of protest, not politics. (Tey were the is rational to do the same – and do so first. result of both.) Te political system All that year, Anglo Irish Bank had been Te trust gap deserved more credit than it got; else- struggling to keep the trust of the mar- Te nadir came in October 2010, when where, it often gets more abuse than kets, resorting to schemes subsequently the markets finally and definitively lost it merits. judged illegal (the “Maple 10” loans and trust in the Irish state, and the people In part, that’s the nature of public de- the Irish Life & Permanent fraudulent lost trust in their government. bate. But it is also likely to be a legacy of deposits) to prop up the share price and Tat month and the following month, A MATTER OF TRUST a crisis recovery that, even as it sought bolster its accounts. In late September, as Ireland entered its bailout programme, also displayed the lowest levels of trust On the global index, Ireland is fourth Public servants and union officials had responded to Brian Lenihan’s Octo- erty line, experiencing anchored income the Sunday Business Post/Red C poll had In this, the loss of Brian Lenihan jr (nowadays active on Twitter). In the abolition of the Seanad, when the elec- to protect aggregate living standards, following the collapse of Lehman Broth- the public relations firm Edelman con- in its banks, which had a trust rating of from bottom in this year’s barometer. It believed themselves to be outside of the ber 2008 call for senior officials to take poverty. (Except where stated otherwise, Fianna Fáil eight points above Fine Gael. was acute. As his former colleagues ei- blog’s final post, in 2013, he or she paid torate rejected what were portrayed as imposed the burden unfairly on some, ers, that trust finally disintegrated. ducted the research for its annual “trust an extraordinary 6 per cent.) has been close to the bottom every year mania and extravagance of the private pay cuts by volunteering a cut of 10 per the data here is from the book Debating A month later, their positions had been ther went to ground or sought to remake tribute to the reputed honesty and dil- power grabs by the government. Ten, exposed the existing unfairness in Irish Fearing that the contagion from an barometer”, which would be published Trust in government here has re- since 2011. sector-led boom, even as they fought cent. When I was researching the bank Austerity in Ireland.) reversed. Fianna Fáil has not since come themselves as social justice activists, igence of Nama’s staff, but pointed out in the 2016 election, an unprecedented society, and often cloaked its action in Anglo collapse would take the other the following January. Edelman surveys covered somewhat since. In this year’s In addition, a “trust gap” has opened to keep their terms and conditions up guarantee, senior officials praised his From 2008 to 2013, Irish incomes fell out ahead. In October 2010, as the bailout Lenihan’s death in June 2011 deprived that this lack of transparency meant that 18 per cent of voters rejected the parties lies and secrecy. Irish banks (AIB and Bank of Ireland trust in 23 rich countries annually, under barometer (based on fieldwork last No- up. What Edelman calls the “informed to speed with those in the private sector. commitment and work rate. He himself by 13 per cent on average, in real terms loomed, Labour overtook Fianna Fáil in the Irish political system of perhaps the it was impossible to know if Nama had for independents, and distrust among Irish society and politics have not in particular) down with it, and lacking four headings – government, business, vember), it reached 35 per cent, a similar public” (college-educated and high- Tose in the NGO sector saw themselves described the work of those officials that – but for the poorest decile, they fell by the polls, and remained ahead until after one person who had the ability to keep done a good job. the small parties and independents of fractured in the way they have in Brit- the information, expertise or experience NGOs and the media – which it then level to that in Britain and the US. er-earning) is more trusting than the as honest brokers, despite having partic- managed the crisis response as “heroic”. over 20 per cent. Te fall in income after the 2011 general election. the system honest, because he was the In the absence of hard evidence, many the left undermined any attempt to ain or the US. Tere is no ascendent to challenge the presumption that the aggregates in a global index. In the meantime, however, trust in mass population by ten percentage ipated in a partnership mechanism that But Hurley was the man at the apex of housing costs is even starker: the poorest It was clear from late 2008, thus, that one person willing and able to take credit assumed the worst. Nama’s secrecy fu- form a coherent left-wing bloc in the populism, nativism, authoritarianism other banks were good, Brian Cowen and Te collapse of trust in the government the Irish media has tanked. In last year’s points. (Tis trust gap is worst in the US blunted public criticism of government the banking system as it hurtled towards decile experienced a fall of 27 per cent, the next government would be led by for policies that were – at the macroeco- elled a belief that bankrupt developers Dáil (or even in government). or anti-immigrant sentiment. Brian Lenihan placed the reputation of in late 2010 drove Ireland to the bottom of barometer, only Turkey had a lower rate and Britain, where it is almost 20 points.) and guided public spending to cata- implosion.