October 5, 2011

Sacrificing jobs to protect landlords is plain wrong

Posted in Irish Independent · 176 comments ·
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THERE are few more evocative images in Irish history than the Irish tenant being evicted by Irish police on behalf of a foreign creditor. For many, this injustice sums up the primary reason for our independence struggle.

It is clear that without the legal system that favoured landlords over tenants, great national movements like the Land League would not have been founded. Ironically, a more flexible legal system would have done more to protect landlords than the rigid legal system, which was designed to secure the landlords’ interests but led to their undoing.

What is sometimes overlooked is that in some cases the landlords themselves were bankrupt and were evicting tenants at the behest of their own creditors. For much of the second half of the 19th Century, land prices fell in Ireland as global food prices dropped in response to an “invasion” of cheaper food and grain from the USA and Latin America. Many landlords were greedy and venal and deserved what they got, but some were not so evil and found themselves squashed by economic forces beyond their ability to control.

That said, it is still clear that the overwhelming victims were the small tenant farmers, who were crushed by a legal system that supported the rights of landowners over all others.

Legal inflexibility and political inactivity led to revolution where the landlords lost everything.

Fast-forward to today and little has changed. The interests of property owners and landlords are still given primacy over the interests of tenants and small businesses. The problem for an economy with 500,000 on the dole and youth unemployment running at 30pc is that landlords don’t create many jobs.

In fact, as was the case in the boom, land and property generate nothing in terms of innovation, ideas, dynamism or skills.

Look at the great companies of the 21st Century: they are founded on human ingenuity, not property punting. Investment in property can only “house” innovation and creativity. In contrast, small business people and entrepreneurs do create jobs and opportunity for others. These people take big risks, without any covenants or guarantees or “upward-only” clauses in contracts and these people are the engine of employment growth.

The legal system should not be used as a battering ram to bully them, any more than it should be used as an instrument to rob legitimate landlords from their fair rental income. There has to be a balance between the interests of the tenants and the interests of the landlords.

There has to be co-responsibility. The tenant and the landlord need to display give and take. When the domestic economy is on its knees, every job needs to be minded and, therefore, solutions to tenant-landlord conflicts rather than evictions should to be the norm for the legal system.

It is against this complex background that the following case is so distressing and emblematic of indignation over pragmatism, where there is only one real loser — the worker.

Next Monday morning, the Sheriff of Dublin, together with his bailiffs, will evict a successful small business in South Great George’s Street. The Sheriff is responding to a court order based on a clause in which allows either party to terminate the lease. So legally, there is nothing wrong; however, legally isn’t enough because ultimately when the business is closed the workers will pay.

As a result, the workers — 22 of them — have decided to barricade themselves in and, consequently, the bailiffs will have to drag these workers out of the premises by force.

The business in question is a thriving bar called Shebeen Chic, which over the past four years has established itself as part of Dublin’s nightlife.

Having lost money initially, this management has turned the premises, which was previously the site of four unsuccessful restaurants, into a hopping venue of music, comedy, food and late night fun. Now it will be shut down.

The workers are the ones who will lose their livelihood. The staff have decided not to take this lying down and their protest next Monday will draw more attention to one of the most perplexing legacies of the bust which is still the primacy of property over employment interests in a country with too much property and not enough jobs.

When you gain a bit of altitude from this and other cases, you see a similar pattern. Many landlords need the rent to service debts they incurred in the boom. And so even if they wanted to do a deal, they might be squeezed by banks to whom they owe money.

It is not always banks, domestic or foreign, that are the sources of the problem. In many cases, it is also Irish pension funds.

The reason we have upward-only rent reviews and nonsense like that is to ensure that the owners of commercial property don’t lose out from the property crash. How mad is that? Many landmark buildings in the city are owned by Irish pension funds. So for rents to fall to reflect trading reality, Irish pensions need to take a hit.

So it comes down to a scrap between the interests of those about to get pensions with those about to go out to work. Pensions are seen as sacrosanct while society tolerates the fact that so many young workers must go on the dole or emigrate. Why should pensions be more protected in a downturn than jobs? Why should the wealth in pensions be maintained, while the wealth in houses allowed to fall?

This inequality must stop. The interests of the young cannot be indefinitely trampled to protect the interests of the late middle aged. For many years the generational nature of Irish economic policy has been evident, whether it was in the housing boom where the young transferred resources and money to the older generation or today when the young are again expected to pay.

NEXT Monday’s eviction is only the latest instalment in Ireland’s battle for economic survival. As the pie shrinks, these battles will become more frequent.

No more than in the late 19th Century, things have to change. In the first decade of the 21st Century, the laws need to change to reflect these new realities because the lesson from Irish history is that if the law protects landlords over workers and tenants, this will soon become the unique source of the grievance. Our history tells us that it’s easy for things to spin out of control, so why let them?


  1. dwalsh

    @ marooned & transitionman and other concerned planetary citizens…

    I was heartened to read all you said in response to MM. I stand with you and all those who are alarmed at our species lemming rush towards biospheric disaster. It is undeniable; we cannot continuously pump millions of tons of toxic wastes into the soils, rivers, seas and atmosphere and expect no harm to ensue to our life-support systems — the biosphere.

    I am not sure whether MM is uninformed or misinformed or what; but there are many who represent his form of mind; and there is no reasoning with it.

    I too have tried to point out that DMcW, and many others here, are operating within the parameters of the media directed economic-speak and are not seeing the bigger picture unfolding globally. The notion that we can or will be returning to the Celtic Tiger; to business as usual, with just a little regulatory tweaking; is myopic and naïve in my opinion.

    The people who really run this planet are not stupid. They know the biospheric crisis is real and not something we can negotiate with or ‘print’ or ‘bail’ our way out of. They have known this since at least the 70s (Limits to Growth). They know we have to change — and quickly. This at least is my best guess.

    If I am right…well…think about it…consider the global economic crisis and the apparent insanity of applying ‘solutions’ that actually make it worse…and are bankrupting the nations…consider what is unfolding through the lens of what I wrote in the previous passage.

  2. Lord Jimbo

    No ‘urgency of now’ with regard to unemployment. Government puts on a ‘Global Irish Economic forum’ with 270 people in a large room, a tourism initiative to bring some extra people to the country, a website connecting the global Irish which was proposed by a lot of people but RTE-PRAVDA gave to nod to just one and that’s it. Curious to know how much the two day event is going to cost the taxpayer. The government seen unable or unwilling to get the money together to put in place the necessary jobs stimulus package and still look to the corporate world to deliver, but even well intentioned companies are not going to create the 200,000 jobs needed, so a lot of this seems like window dressing. With unemployment rising in the US, Amercian companies will be under even more pressure to keep jobs at home. Seems like an expensive cul de sac, a legacy of failing to diversify the economy, over-reliance on construction and foreign multinationals who will relocate at the drop of a hat. We need to come up with something else and now go for ‘easy’ options which in the long term for not sustainable, got to look to our own people, give them the money to start their own businesses if at all possible.

    • Lord Jimbo

      While David’s article makes a mockery of the efforts above, there are things the government could be doing but they refuse, so businesses will close, unemployment will rise and yet here they are appealing to some senior executives to ‘open doors’ and create jobs. Absolute lunacy.

  3. The Global Economic Forum is a bit of a laugh really.

    Sean Whelan of RTE was reporting on it for the evening RTE news yesterday praising it from on high. According to Whelan of Pravda RTE this was good news compared to the not so good coverage given to our economy by our newspapers and the bold boys on the internet.

    Do many of those in attendance care or pay any attention to acquiring a good grasp of economics? Do they not see the government have scuttled all their good ideas with a great big gaping hole in the economic hull due to the asphyxiation of our economy by the troika and the EMF and our failing efforts to keep up with debt repayments among the highest per capita in the world.

    Do those in attendance get to debate these matters? They probably get dosed with propaganda from financial marketeers telling them the economy is on the mend and ‘growth’.

    Unfortunately, the whole thing has been a huge propaganda exercise for the failing policies of this government? Tourism idea is a no brainer and tried in Scotland in 2009. We should try it, but not under the high trading costs imposed by the membership of the eurozone.

    The veneer of propaganda extended to coverage on the detail of the discussions being kept severely under wraps. I presume this was because of ‘comercial sensitivity’. How often has that phrased been used to cover up financial crimes in the banks and the Irish financial world, surely extending it to the limp forum acting without public participation is a step too far.

    A public debate from interested participants on topics raised in this forum would have been interesting? But according to the government, we are invisible. The whole exercise was a farce attempting to treat the specks in the Irish eye while failing to address the big plank in Pravda RTE’s and the governments’ eye

    Printing presses ready, best thing we can do to get our economy going again, is to leave the euro, write down our loans based on ability to pay, follow the lead of Iceland.

    Then lets have our forum and real ideas that can be effective in waking up this island. Not this Sean Whelan, Sean O Rourke, David Murphy Pravda RTE FF/FG Global Economic Forum nonsense propaganda, to fool us all.

    Simples.

  4. redriversix

    JP Morgan ” donates ” 4.5 million dollars to NYPD social fund, not weird at all !!!!

    Maxkeiser 6 oct

    • Re “not weird at all !!!!” Nope its not, JP Morgan investment bank is soon to fall. Sooner they enact real laws in a new Glass Steagall to curb the activities of invetment banks like these, the better. We need banks to be commercial banks with real depositor money, not funny money investment banks playing with enormous CDS exposure liabilities to Greece and Ireland and elsewhere playing the casino assured the government will come along and feed them with more casino chips!

  5. http://www.ft.com/intl/cms/s/0/db0e3068-f0d2-11e0-aec8-00144feab49a.html?ftcamp=rss#axzz1aBKAuZuy

    Downgrade of 12 UK banks on the surface is bad news, on the other hand it reflects the UK government is going to desist from crazy policy of bailing out failing banks.

    • Tull McAdoo

      That should weaken Sterling in the great battle of “exchange rates” taking place in the North Atlantic (Euro,Sterling,Dollar).
      It should counter the Euro weakness after the Italy/spain downgrade.
      The timeing of this intervention by the Bank of England will be bad for Ireland coming up to the Christmas shopping season. Expect a big uptick in crossborder shopping.We will be “collateral damage” in these economic battles.
      Mickey Noonan might have to re-think his austerity budget planned for the end of year me-thinks.

      • Its part of the race to the bottom, UK’s QE2, following US QE1, to be followed by soon to be EMU QE3, to be followed by UK’s QE4 etc etc

        Inflation is hitting the UK very badly at the moment

        Game is up, time for the banks to get the contagion virus already being suffered on their behalf, by ‘the people’.

        Perhaps Merkel has worked it out that:

        QEx = 0

        Printing debt when printing debt is the problem doesn’t make the problem go away, it makes it worse.

        • Tull McAdoo

          Debt in and of itself should not pose a problem per se.In my experience it is the assessment and pricing of the risks associated with a particular debt that causes the problem.
          It is this understanding of risk that seperates the real bankers from the casino cowboys.It goes without saying that placing your trust in mathematical models that are not easily understood by most bankers will always end in tears…..

          • Tull McAdoo

            P.S. Afterall remember one of Tull’s old adages ” One man’s debt is another man’s investment” LOL.

  6. John Corcoran

    Rent is the symptom, ruinous Irish commercial lease law is the disease. Ireland has the most anti-tenant commercial lease law in the world. Ruinous Irish commercial lease law i.e upward only rent reviews tied to long leases, was a twinheaded monster which encouraged and incentivised the over-renting of tenants and significently inflated the valuation model for Irish commercial property. This in turn was one of the two factors which created the commercial property bubble. The reckless banks lent tens of billions against these feudal leases and not against the properties. No other member country of the eurozone tolerate this ruinous lease law. In all other eurozone countries, commercial leases lengths are on average 5 years and rents are adjusted annually by the movement in the CPI. In Ireland average lease lengths are 25 years ,with no break clauses,and rents are adjusted every five years using the notorious ratchet upward only rent review clause. So if a landlord can find any fool to agree an absurd rent every other tenant in that street or shopping centre must pay the same. This notorious system was wide open to corruption and a substantial body of tenants felt it was systemically corrupt ,with landlords using secret agreements ,side agreements and other trickery to unfairly increase tenants rents. This corruption destroyed tens of thousands of sustainable businesses and jobs.

    In the rest of europe the guiding philosophy in valuing commercial property is the quality of your property ,in Ireland it’s the quality of your tenant. Reckless Irish banks and ruinous commercial lease law destroyed our country.

  7. goldbug

    IRELAND DOES AS EU WANTS…CREATES CRISIS

    BARROSO – WHEN THERE IS CRISIS “WE” MAKE PROGRESS…

    http://www.youtube.com/watch?v=Nh6KtBYgJQ4

  8. bilboburgler

    Well I guess
    1) if the landlords can get some more money for the site they will affect the creation of more jobs
    2) if the landlords can not get more money they need to negotiate lower rents
    3) the staff lost to the present company could get the new jobs from the new company (well know because they have blown it)
    4) if the bar is so good why not pick it up an move it to a new site

    seems like a lot of moaning about capatalism without trying to sort out the problems

  9. Where is WALLY

    Are Gaddafi and Cowen hiding together and are they in the Desert or the Bog ?

  10. silverbullet

    Heres the type of person who did the bidding for he Sheriff of Dublin :
    Court messenger me arse,
    http://www.irishtimes.com/newspaper/frontpage/2011/0309/1224291669001.html

  11. Allez Les Bleu

    Welcome to Blue Monday and Blue Tuesday and Blue Wednesday this week .Be Prepared.

  12. @John Corcoran

    Agree with you 100%

    “Germany
    In Germany, real estate appraisal is known as real estate valuation (Immobilienbewertung). Real estate appraisers (Immobilienbewerter or Gutachter) can qualify to become a Öffentlich bestellter und vereidigter Sachverständiger (officially appointed and sworn expert). However, this formerly very important title has lost a lot of its importance over the past years, but still is of some value in court procedures. The title is not generally required for appraisals.

    Governing authorities

    The real estate appraisal practice in Germany is partly codified by law. The federal Baugesetzbuch (abbr. BauGB, “German statutory code on building and construction’”) contains guidelines on governing authorities, defines the term market value and refers to continuative rules (chapter 3, articles 192 ff.). Each municipality (city or administrative district) has to form a Gutachterausschuss (appraisal committee), consisting of a chairman and honorary members.[11] The committee gathers information on all real estate deals (it is mandatory to send a copy of each notarial purchase contract to the Gutachterausschuss) and includes it in the Kaufpreissammlung (purchase price database). Most committees publish an official real estate market report every two years, in which besides other information on comparables the land value is determined. The committees also perform appraisals on behalf of public authorities.

    http://en.wikipedia.org/wiki/Real_estate_appraisal

    Germany the property market is tightly regulated and run professionally and efficiently.

    Any talk of adopting a similar system here? No!

    Because the system is a scalping of the consumer by both the banks and the financial system of real estate that feeds on it.

    ‘The Gathering’ which sounds like a title for a new horror Carpenter horror movie in 2013, tours around the countries ghost estates accompanied by inducements for outsiders to invest in Ireland’s property market scam, could be the main attraction!

  13. paddlemeowncanoo

    anyone any ideas with what best to do with cash?
    Ive no house or mortgage or pension and about 135k in euro savings. I recently bought 20k worth of gold.

    With recent news about banks etc I wonder how safe my money in the bank actually is. I have my money split across a few banks incluging Rabbo and a belgian one but surly if one bank goes under many more will..

    If its banks remain safem theu Euro will surly be more and more worthless as time passes

    • Tull McAdoo

      Buy up works of art from cash strapped insiders who were caught by the goolies when the whole thing went beyy up.
      Bet you were not expecting such a scientific answer….ha ha …

  14. CitizenWhy

    Weird contradiction in the IMF.

    1. The following takes you to the IMF models that show that rising income inequality (such as in the US) is bound to lead to financial crises. The models also explain crash of 2008 and why the USA cannot recover from it.

    http://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf

    2. Yet the IMF is imposing austerity everywhere, a great way to cause rising income inequality.

    Anyone have some spare meds they can send to the IMF?

  15. @dwalsh – I couldn’t be more in agreement with you. But who wants to be the first prime minister or country leader that says, “We can’t handle what you are throwing at us?” by going into default / receivership. We are asking a politician to give a financial answer.

    Maybe we need a group of fund managers to take over leadership, some with very little political background! Just performance metrics as their results…

  16. Putting Out The Fire With Gasoline

    http://www.youtube.com/watch?v=dAagFKdsSNs

    Folks, its all OVER, Merkel has a plan that will require closer political and monetary union which will require a REFERENDUM.

    She’s a smart lady. She knows the game is up. Better the people pull the rug from under the schenanigans, rather than she herself. Unfortunately, we did not have, nor do we have at the helm, her ilk.

    At least Enda has signalled No to changes that will be proposed for Lisbon.

    We finally get to vote against the banks. Can’t wait to vote.

    Get the printing presses ready.

  17. Bono to lead a world tour of insiders, (Tax exiles like Dennis O Brien and Bono perhaps?), to generate business for Ireland Inc?

    Nah, couldn’t be true!

    Could it, he cried? :-)

  18. [...] David McWilliams » Sacrificing jobs to protect landlords is plain wrong [...]

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