The imminent general election is likely to boil down to a showdown between the party of bricklayers and the party of bookkeepers.
In a country where we need to build housing yet keep within a budget, the bookkeepers will try to convince us that they can build, and the bricklayers will assert that they can balance the books. Which one of these voters believe will likely be the party that wins.
History shows us that there is no meaningful constituency for fringe politics here, whether it be left or right. Therefore, after all the debates, posters and policy promises, our proportional representation system is likely to throw up a Fine Gael (FG) government propped up by Fianna Fáil (FF), or a Fianna Fáil government propped up by Fine Gael.
Apart from their views on the Royal Irish Constabulary, the ideological and economic differences between FF and FG are wafer thin.
The parliamentary lesson from Brexit and the UK, is that being convulsed by radical right-wing nationalism and radical left-wing nihilism leads a country up a garden path.
The latest evidence of this nonsense is British prime minister Boris Johnson stating this week that he will go to war with the EU over fisheries, despite that fact that British fishing is less than 1 per cent of GDP, less than 0.5 per cent of UK employment and the British catch is eaten by Europeans.
Such “Dad’s Army economics” (risking a free-trade deal for some great, patriotic, British fisheries victory), is not what sensible countries do. Expect more political pantomime as the clock runs down again to a hard Brexit.
Record levels of employment, increased social spending and a general unwillingness to rock the boat, make it highly likely that Ireland will vote not radical right or radical left but for the radical centre.
Why, you might ask, is the centre radical?
When the rest of the world is lurching to extremes, beguiled by various strains of nostalgia, wanting to turn the clock back rather than plough forward, to do the opposite by steering a centrist, liberal course, is indeed radical. In an irrational world, where it is easy to sloganeer and look for quick fixes, it can be difficult to commit yourself to a rational, reasonably dull middle ground that is governed by realistic economic rules.
Let’s go back to the idea of bricklayers versus bookkeepers.
For years, Fine Gael, the bookkeepers, have been able to balance the books but they have a poor record on social housing.
In contrast, Fianna Fáil could build, most memorably, ghost estates, thousands of houses in places where no one wanted them. Yet, more than once, Fianna Fáil bankrupted the country. Ideally, if we could fuse the brickie bit of Fianna Fáil with the bookish end of Fine Gael, we might have something like stable centrist government.
With Ireland growing like it is today, we need inventiveness in the building sector to catch up with our massive infrastructural deficit. At the same time, when we are in an era of zero interest rates and we are in a monetary union, we can afford to be inventive in the financing sector.
For the bricklayers, in terms of housing and infrastructure, a growing country is, as I’ve said before, a bit like a teenage boy. There is no point buying trainers that are the right size; you need to buy them a size too big. Likewise, we need to build infrastructure, not for the current population of nearly five million but for a future population of 5½ million.
For the bookkeepers, in terms of balancing the budget, global zero interest rates and the fact that we don’t have our own currency means we can borrow much more, locking in lower interest rates without risking our financial integrity. This is particularly apposite when the domestic banking sector is (rightly) constrained by Irish Central Bank rules. Ireland can never again allow banks to be any more than a single-digit growth business. This means keeping their loan books in check.
Thus, there is a crucial role for the State or outside finance to fund house building.
The problem with outside finance is largely one of optics. If foreign landlords own much of the new housing stock, it doesn’t “feel” right. But if we police these owners fairly with proper management and regulation of the rental market, it shouldn’t matter who owns the stock.
The only fly in the ointment with this approach is the expectations of the owners of foreign funds. If they feel they can operate their Irish rental portfolios like a quoted company, sweating assets here, cutting costs there, then the State must protect the interests of its citizens over the desires of foreign capital.
It would seem preferable for the State to be the builder of last resort, raising a housing bond and sub-contracting the building to local developers. When we have a rental crisis and the offence of homelessness, we are at the last resort.
There is no more time. There are many ways of delivering housing and many ownership possibilities within this structure, but ultimately the State needs to do deals with developers, who are the only people capable of building.
Therefore, the bricklayers and bookkeepers need to do a housing deal – but there must be a quid quo pro. If the bookkeepers use historically low interest rates to release capital to the bricklayers, in order to achieve the ultimate goal of building more housing, then there must be a “hoarding” tax.
Land that is being hoarded and not used should be taxed so heavily that it becomes impossible to hoard. In a new deal between bricklayers and bookkeepers, hoarding must be penalised – and penalised aggressively. This will drive down the price of land because it will cause a surge of land to be brought into use to avoid the heavy penalty of the new tax.
The party that runs on a meaningful hoarding tax platform will get my vote.
Thirty years ago today the Berlin Wall fell. At the time it was widely thought that the main economic beneficiaries of the collapse of communism would be the former Soviet satellite states of eastern Europe, suddenly liberated from the stultifying grip of Marxism-Leninism.
This was particularly the case for countries such as Czechoslovakia and Hungary, which had impressive manufacturing bases before the second World War. The theory at the time was that educated and technically able communist workforces would embrace capitalism, attracting western investment due to relatively low wages, thus propelling those countries upwards.
However, the country that benefited most from the end of the cold war was one that had been neutral, poor and peripheral to the major conflict of the 20th century. That country was Ireland.read more
Are we witnessing the beginning of the end of meat? Will future generations regard our habit of using an animal’s digestive system to turn vegetable protein from grass into living body parts, and ultimately slaughtering that animal in order to ingest what was the original vegetable protein, as not only barbaric but idiotic?
I say idiotic because, already, science can replicate meat using plant-based proteins.
Burger King this week announced it will be selling two plant-based burgers at its burger joints all over Europe. The Rebel Whopper and the Rebel Chicken King are already available in Sweden and are soon to be “rolled out” across Europe. When Burger King – hardly a cutting-edge player in changing dietary tastes – embraces synthetic meat, you know something significant is afoot.read more
This week an American survey ranked Ireland as the eighth most entrepreneurial society in the world. This is an essential characteristic if we are to maintain our relatively high standards of living.
In economics, not enough attention is paid to this cussed, sometimes unreasonable creature, the entrepreneur. Without the relentless pursuit of new business, an economy will stagnate, and without economic growth, tax revenue dries up, resulting in less money to fix social problems. A healthy economy is a risk-taking economy.
Over 70 per cent of Irish people are employed in small domestic companies. This is higher than the EU average. More than half of all Irish people are employed in small or micro companies that employ under 49 people.read more
What if everything you know is wrong? Imagine what it would be like, had you devoted your professional life to a discipline governed by reasonably predictable rules, only to find out, 25 years later that the rules no longer applied?
Spare a thought for the traditional macroeconomist, who has seen this happen. But the changing economic rules also affect your pay packet, and not in a good way.
For most of the past century, the world’s policymakers have been on the alert for inflation. The 19th century was an era of practically zero inflation, whereas the 20th century, in economic terms, was a period characterised by inflation. This was most notable during the 1920s in Germany and Austria, the 1970s in the United Kingdom, and the late-1960s to early-1980s in the United States.read more
If you happen to be a Jackeen relation of a large Cork family, we might get together and form a self-help group. Given the amount of inter-cousin abuse I’ve had to endure over the years, it’s tempting.
Being a semi-detached, arms-length Corkonian comes with its burdens but they are but nothing compared with those carried by the Leesiders themselves, who combine fragile victimhood with muscular self-regard. But putting the inter-city rivalry aside, one thing is clear to me: if Cork doesn’t succeed economically in the years ahead, Ireland will also go backwards.
Cork is the litmus test when it comes to Ireland’s ambition to lift the burden of development from Dublin’s shoulders. If Cork can’t do it, nowhere can. The development of Cork won’t come at the expense of other cities such as Limerick or Galway, but will be complementary, and is vital for spatially balanced growth in the country.read more
Have you ever wondered why the windows of the Bank of Ireland on College Green in Dublin are bricked up? It is because of the imposition of a wealth tax, called the “window tax”.
Ireland, the UK, Holland, parts of northern France – unlike the Mediterranean – are starved of natural light at certain times of year. In the pre-electricity era, light was a luxury in these countries.
The urban poor lived in a dark world of gloomy, window-less hovels, while the rich who wanted to live in the brightest rooms possible, built magnificent ceiling to floor windows to let in the light . Georgian sash windows attest to class difference; the poor lived in the shadows and the rich lived luminously.read more
On Wednesday evening at rush hour, with rain falling steadily and traffic bumper to bumper, I hopped on the Dart from Dún Laoghaire to Dublin city centre. Plugging in my headphones, I thanked my lucky stars that I live in one of the few areas of Ireland that has a reliable train service.
Relaxed ahead of a meeting, safe in the knowledge that the train would be on time, I considered how good public transport infrastructure enhances our lives. It’s not just a means of getting from A to B , it’s a mark of a civilised, democratic country. But why should citizens who live along the Dart line enjoy a luxury that is denied to others?
Providing public infrastructure is a basic function of any state – and we are failing. The track my Dart runs on was laid before the Famine. I’m not joking. Transport infrastructure is an ongoing project, and a country with a growing population and ambitions to compete internationally needs to constantly upgrade.read more
Dubai is not for everyone. The glittering metropolis, which erupts out of the desert, captures much that is good and bad about humanity in a few square miles.
On the good side, this extraordinary trading hub, reveals what human ambition can achieve. As it waves its two diamond-encrusted, air-conditioned fingers to Mother Nature, a city where none should be, Dubai stands testament to what can be done through sheer force of will and extraordinary urban vision.
On the other hand, Dubai’s legions of mostly Asian labourers, who toil away under the searing heat, remind us again of the world’s unacceptable inequalities and how – irrespective of the huge strides made in recent years – the lottery of location or the accident of birth, dictate our time on this Earth. The city’s success is partly a product of deeply problematic bonded labour.read more
David has been writing for almost 20 years and there are plenty of articles covering some of the most turbulent times in the world economy.
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