April 7, 2010
Over 100 years ago, JM Synge described the gombeen man as follows, “groggy patriot/publican/ge-neral shopman who is married to the priest’s half-sister and is a second cousin once removed of the dispensary doctor … the type that is running the United Irish League anti-grazier campaign, while at the same time they are swindling the people themselves in a dozen ways and buying back their holdings and packing off whole families to America”.
When we see the closing of businesses and the emigration of our neighbours and relations while deeply entrenched “insiders” disguise national robbery in the emotional language of patriotism, it is not difficult to conclude that the gombeen man never went away.
Even in terms of the detail of Synge’s gombeen man buying up the peasants’ holdings, it is obvious that, for NAMA to work, the State will have to trade land cheaply at some stage in the future. And guess what? To get the market going it will have to sell stuff at way below the price NAMA bought the stuff for in the first place — that’s how to generate liquidity. So like Synge’s gombeen, the very people who caused the mess will be given the opportunity to buy the stuff back cheaply in a few years’ time.
Let us examine the bailout of Anglo/NAMA through the prism of the late 19th century and early 20th century politics of rural Ireland — where most of us came from. It is easy to see the direct link between the ways and wiles of the post-Famine gombeen man and the instruments and choices made by this Government.
We see the return of the gombeen tactic of saying one thing and doing quite another, terrifying the people into believing that we have no option but at the same time, setting aside â‚¬2.5bn in fees to make sure the gombeen’s pockets are lined with silk despite the people’s misery.
We are seeing not the return of the traditional gombeen but the emergence of his direct descendent, the neo-gombeen, who is a traditional gombeen hiding behind the international lexicon of high finance. The neo-gombeen thinks that if he uses the language of the ‘Financial Times’, as opposed to the ‘Skibbereen Eagle’, he can get away with it.
Given the pliant nature of the national reaction to the Anglo/NAMA business, the neo-gombeen’s plan might seem to be working. But, in reality, it matters not a jot how many references the neo-gombeen makes to “bond market spreads”, “basis points” or “rating agencies”, the game is the same; the players are probably better dressed but that’s about it.
In Parnell’s Ireland, the traditional gombeen man thrived by lending money to the peasants, charging huge interest rates and when the peasant couldn’t pay, the gombeen man repossessed his neighbour’s holding and moved on to the next debtor.
A recurring feature of the post-Famine gombeen man was his willingness to put his fellow Irishmen in debt in order to make a few quid for himself and, more significantly, to please his foreign bankers who lent him the cash in the first place. Does this sound familiar?
Today we see a repetition of this pattern. The middlemen in Ireland who will make money from the bank bailout are salivating at the fees they are about to earn, and scaremongering the rest of us into believing that “there is no alternative”. But of course there is.
Letting Anglo go bust is what free market capitalism is all about. Failure is punished and success rewarded — these are the rules of free-market capitalism. It is about risk and return and a corporate default in Anglo wouldn’t make one bit of difference to Ireland’s creditworthiness. It wouldn’t affect our reputation because we have no reputation to defend. In fact, a default in Anglo would signal that this is a proper capitalist country, not a “gombeen capitalist” country.
But even if neo-gombeenism wins, the victory will prove to be short-lived — a sort of smart arse victory which has no substance. The reason is simple: the world has moved on. The rest of the world is getting on with creating wealth from new and viable businesses. This wealth generation is in direct contrast to the favoured method of the gombeen man, which is stroking a few quid from wealth that has already been generated. This is why it is so crucial for neo-gombeenism that the Irish status quo and land/credit/banking oligarchy remains intact.
Gombeen capitalism is never about generating new, real wealth from innovation, hard work and trade. It is about taking a cut. Central to it is land and property. If the gombeen can engineer an increase in the perceived value of land, then he can get a small slice and that prevents him having to go to work or trade.
Keep this in mind and think about the core contradiction at the heart of this Government’s economic policy. On the one hand we have the deep-rooted gombeen capitalism of Anglo/ NAMA and on the other we have the ambitious, but achievable, “smart economy” idea.
The Anglo/NAMA strategy encourages what is called “rent seeking” in economics. This is where the professions see something that they can milk fees out of, and rather than create proper business, they trouser fees which ultimately come from the general public’s taxes.
Therefore lawyers, accountants, stockbrokers, estate agents, valuers, senior civil servants and politicians are all behind the NAMA/Anglo stroke. As long as this structure stays in place, it replicates itself. It makes sense for the mammies of Ireland to urge their smart kids to join the professions, why wouldn’t they?
Now contrast this with the smart economy idea, which — at its purest — is an effort to create a Silicon Valley here, where capital and brains come together to build a new economy.
But this takes money. The Government has said it will set aside â‚¬500m to help create this economy. This sounds like a lot — until you think that it is putting 44 times more money into the Anglo black hole. So it is spending 44 times more to keep one fetid bank from the gombeen economy afloat than it is in trying to make this economy work properly.
Now, with the new education-based innovative economy in mind, think about how much of a competitive kick we could get for the money we are wasting in Anglo. There are 22 universities and third-level institutes in the country so they could get a billion each for a start. And they could get a thousand new professors working on research projects for 10 years. Now imagine going out and telling the world about that and see how much capital and expertise would flow in.
Or maybe we’d like to spend the Anglo swag on students. There are 146,000 full-time students here at the moment. So we could spend â‚¬38,000 per student; imagine what sort of education that would give them. Or what about spending some on early intervention in children’s education? Or what about the new Science Gallery in Trinity? It cost â‚¬100m. We could build 223 of them all around the country. That’s a possible future.
So who is going to win — Old Ireland or New Ireland?