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Ireland must focus on mitigating the external risks to our economy

Monday, March 20, 2017 3:45
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(Before It's News)

I’m writing this from Groningen, a beautiful city in the Netherlands with one of the world’s oldest universities. Groningen’s buildings still bear the scars of World War II, and it is a place where learning and culture combine easily.

The contrast between what people are saying on the ground in Groningen and what you can read in the international press is, frankly, astounding. For the international press, the Dutch elections are the latest in a line of anti-establishment dominoes started by last June’s Brexit result.

The dominoes next to fall are France and Germany, and then the European Union is toast. The international election coverage hinges on the personality of far-right hair-enthusiast Geert Wilders. It’s easy to see why Wilders is news. He is anti-migrant, anti-Islam and Eurosceptic. He is more Trump than Trump and he sells papers and gets clicks.

Wilders wants to leave the European Union, bar asylum-seekers, cease funding development aid, increase defence spending, ban the Koran and Islamic schools and, of course, decrease income taxes. Stop me if you’ve heard some of this before.

For the Dutch, the question was not whether Wilders would attain power. Everyone I spoke to assured me he hadn’t a snowballs, because their proportional representation system, much like ours, ensures a coalition of three or more political parties as the likely result. No other party wants to work with Wilders. He eventually did get the predicted 20 seats in the 150 seat parliament. Wilders is going to remain on the outside of real influence, but will still be free to say whatever racist nonsense comes into his head.IMG_1589.JPG

The Dutch citizens I spoke to were honestly quite bored by Wilders, because he has been repeating his anti-immigrant message for a decade now, albeit at higher and higher volumes. In Dutch national politics, Wilders is passé. He is not invited on radio and TV debates as his chances of power are slim.

There is another key constraint: with more than 25 political parties, air time is precious and metred out as fairly as possible, so Wilders is drowned in the political soup he helped create.

European identity politics

Wilders’ ‘failure’ is now being sold by the international press as a refutation of the politics of Trump and Brexit. EU politicians turned to Twitter seconds after the exit polls were released trumpeting the failure of extremism to secure power, and other such hyperbolics, with an emphasis on the – bolics. The ‘I told you SOS’ lit up the phones of Europe’s political wonk-brigade. The problem is, they had created a racist straw man to knock down, and so their victory was similarly straw-made.

The facts on the ground showed us why Wilders could not win. The Dutch use a proportional representation system much like ours, and this forces small open economies like ours and theirs to create what the political scientist Peter Katzenstein in his landmark book Small States and World Markets calls “peak associations”.

Peak associations organise the interests of a large proportion of workers and other interest groups. Ireland’s peak associations are things like Fianna Fáil, the GAA, and so on, which have been somewhat fractured by austerity.

In the Netherlands, these peak associations have been similarly fractured, but they also conspired to keep him out of power.

If Wilders will not wield power directly, it is certainly true that his influence is more pernicious. All the Dutch I spoke to last week agreed Wilders has moved the debate on the Netherlands’ place in the European project into a dangerous place. To retain their followers, centre-right parties have had to tack right to meet the demands of other more moderate, but still conservative, citizens.

The result has been a dramatic change in the discourse and a fracturing of the main political power bases, with an explosion in potential candidates. One district had 1,114 people standing for election, for example. The ballot paper was so large it threatened to eat the voters.

It may well be that those several parties that do attain power in the Netherlands will implement at least some of Wilders’ ideas, albeit in watered-down form. If so, Wilders and his racist ilk will have won, and the Dutch election will be the petri-dish for European identity politics the international media want it to be, just not through the obvious channel of influence.

Upsides and downsides

The important story I think is being overlooked is the electoral immolation of parties of the left and centre left across Europe. Their policies are incompatible with the imposition of austerity and where they have supported it, they have failed in subsequent electoral contests.

The traditional larger left parties have collapsed in the Netherlands, withered by their coalition support for a liberal centre-right party. The voters think the Labour Party has betrayed its promises to the electorate, and voted them out in droves. Yet another parallel with the Irish experience.

The international debate now moves to April’s French elections, personified by Marine Le Pen, and the German elections in September, which pits Angela Merkel against Martin Schultz for the leadership of the free world.

The reality of each of these elections is far, far more complex, of course, and the lesson of the Dutch election is that we will need to look beneath these personalities to get a handle on what is really going on.

What is really going on in both of these countries will be important for tiny little Ireland, so it is well worth sorting through the complexity of different political systems to get a sense of what the likely outcomes are. The best way to do this is to go to these countries and talk to people there.

Polls and prediction markets are helpful, but I wouldn’t trust them as much as I’d trust journalists being there and talking to people.

Ireland will have a new leader in a few months. He or she will face a number of problems, not the least of which is Brexit and our relationship with the North and its border. The new taoiseach will have to do all of this within a minority government terrified of making decisions, and with the clock running out on a confidence and supply agreement. The Irish economy is growing at over 5 per cent a year, and this growth masks some of our vulnerability to external shocks.

When disposable income is rising and people have money to spend, it is very hard to talk about risks to the nation with any degree of urgency. It’s very easy to blithely ask ‘crisis, what crisis?’. And yet, there they are, heading towards us. Trump’s protectionist policies are a risk. The Brexit negotiations are a huge risk. The prospect of bringing financial firms we might not be able to regulate to Ireland is a risk. Our failure to adequately deal with the three major public policy problems of our generation — homelessness, healthcare and education — is a risk.

Tiny states like Ireland are affected by international events far more than they affect them. These events mean we have to focus on adapting the structure of our economy to the conditions the international economy presents us.

Every risk has a positive and a negative dimension. There are upsides as well as downsides, and a focus on mitigating these risks has the potential to change the country. For example, fixing the governance structures of our healthcare and education systems would result in large changes to the way public policy is delivered, and change the toxic debate around the place of the religious in our public life. Ireland’s schools and hospitals should be Ireland’s, not the Church’s or anyone else’s. If we fund it, we should own it — warts and all.

Right now we can’t be sure the housing the government is delivering is accurately measured.

Work by Dr Lorcan Sirr of DIT shows us that changing the way we measure our new houses will give us a better picture of the true extent of the housing problem we face, which means we stand a better chance of actually solving the problem. As the mathematician Marty Rubin wrote: “Every line is the perfect length if you don’t measure it.”

A focus on the capital side of our healthcare system — the hospitals, the primary care centres, the digital infrastructure — rather than the current side – salaries for doctors and nurses and drug costs – would help us achieve real change in healthcare.

Each of these changes is within our gift as a tiny open economy. Each is within the purview of a democracy. Each change is complex and difficult, and not amenable to the reduction to personalities we have seen in British, US, Dutch, French, and German elections.

Not only does the new, post-Kenny Irish government need to get its act together, the media need to stop caricaturing every problem as a battle of hairstyles. We can and should do better.



Source: http://www.stephenkinsella.net/2017/03/20/ireland-must-focus-on-mitigating-the-external-risks-to-our-economy/

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