September 21, 2015
It’s always odd to pass places you used to work. Nostalgia plays tricks on you. I am walking down the shaded side of Boston’s Newbury Street in the height of a wonderfully hot late September afternoon. Just across the road is the restaurant where I spent a summer washing dishes. There was a long Indian summer that year too. The heat in the kitchen must’ve been in the mid-90s.
Anthony Bourdain, the great American chef, wrote in Kitchen Confidential about the intense camaraderie which binds kitchen workers, all the way from the dishwashers and kitchen porters on the bottom, to the side chef, sous chef and – of course – the showrunner himself, the head chef.
Bourdain is spot on. Sure, you might hang out with the waiters and waitresses after a late shift, but your real mates are the creatures of the sweaty cauldron when the restaurant is slammed and everything is one side order away from chaos.
And what creatures! The kitchen is the last refuge of all sorts. No one asks too many questions, you proffer what you want and hold back what you need, initially, at least. With the exception of the Americans, everyone in our mid-1980s kitchen was illegal, so that kept us all a bit edgy. My comrades were Colombians, Argentinians and Nicaraguans.
We communicated in the international language of the free kick, the flick-on or the dodgy off-side. Our pantheon wasn’t Babe Ruth, the Red Sox and Fenway. It was Pele, Valderrama and the Aztec Stadium.
This was the summer of Diego Maradona and the ‘hand of God’. It was an America before David Beckham, Robbie Keane and the LA Galaxy – America before soccer.
Deep in the kitchen beneath the earth, we were bonded together by a love of football, reggae and a heightened fear of the Internal Revenue Service.
We also understood that the only way was up. Even from there, it felt that America was the land of opportunity.
That was the promise. We believed that if you worked hard, you could get on in a way that you couldn’t get on in your home country.
For us Irish students, we were only playing at the American Dream; for the others, it was real. They saw the guy on the hill with the big house and said to themselves: “One day, I can be him.”
Upward social mobility, or at least the promise of upward social mobility, is what keeps most western societies going forward. This has always been the case.
People get out of bed in the morning because they expect today will be better than yesterday. We invest enormously in our children to give them the chance to do the best they can. Real life seems to be a constant striving for self-improvement for all. It’s like a conveyor belt.
This is what social mobility is all about and upward social mobility demands a bit of room on the hill for everyone. There has to be a chance.
But what happens if that social conveyor belt stops? What happens when the concentration of wealth at the top becomes so extreme that there is very little left to go around? What happens when policies all over the world explicitly work to make rich people richer?
This is exactly what has happened all over the West in the past 10 years. The recessions provided a once-in-a-generation opportunity for rich people to become even wealthier.
Right now in Ireland, the spoils of society are going almost exclusively to the very rich.
Last year, the 100 people on the Irish Rich List earned €12 billion. Just to put that in context, it is twice as much as the entire growth in Irish GDP last year.
We are not talking here about the mythical 1 per cent. If it were the 1 per cent, we would be talking about a significant cohort of between 46,000 and 48,000 people. Here we are talking about 100 individuals. This is off the scales.
But now you know what happened, the question is why did it happen? It happened as the direct consequence of policy.
During the recession the value of all sorts of assets all over the world collapsed. This caused a ‘liquidity trap’ where normal economic policy didn’t work.
The rate of interest fell to zero but nothing happened because the people had too much existing debt and they didn’t want to borrow any more and the banks had too much bad debt and they didn’t want to lend. So the normal way of getting out of recession, which is to cut interest rates, was ineffective.
The economy was stuck. The authorities, from the US to the ECB, printed money and gave it to the banks to lend out as they saw fit. This is called quantitative easing.
This free money drove up asset prices, particularly stocks. And in the main who owns stocks? Why, rich people, of course.
So people who depended on assets for their income began to do very well. However, the vast majority who depend on wages for the income, saw their income go the other way because of (1) taxes and (2) competitive pressures in manufacturing from China and (3) deflation associated with austerity.
Simultaneously, a massive fire sale was going on for real assets where the value had collapsed in the recession. However, only people who either had cash or could borrow could take part in this fire sale. And who has the cash? The already wealthy do.
In addition, because the banks were nervous about to whom they should give this newly minted money, they gave it to people who already had cash and other assets. So the already wealthy were given the means to buy yet more. And as they bought the prices started to rise, expanding their wealth yet further.
Finally, in Ireland Nama has been offloading huge parcels of property as quickly as it can and mainly to massive funds that are owned by very wealthy individuals.
And as prices recover, these people are making fortunes which will be realised when they sell. And guess who these foreigners will sell to? They will sell to Irish people at much higher prices.
We have seen a massive transfer of wealth in the recession from the middle to the very rich. This has ensured a significant wealth divide – the sort of inequality not seen in this country for over 100 years.
The problem with wealth inequality as opposed to income inequality – which is not bad in Ireland – is that it leaves so many people in the middle behind. And when people feel left behind or locked out, they tend to react extremely.
So it’s in everyone’s interest – even the very rich – that this should not go unchecked indefinitely.