Monday 26 June 2017

When Britain is gone from the EU, Ireland will have to stand up for itself in the post-Brexit era

A woman takes part in a protest against Britain’s decision to leave the European Union. Photo: Reuters
A woman takes part in a protest against Britain’s decision to leave the European Union. Photo: Reuters
David McWilliams

David McWilliams

This week various obituaries to TK Whitaker were constant in their praise of Mr Whitaker's ability to break with conventional wisdom. It is ironic that many of these obituaries came from people deep inside the Irish establishment who have never questioned Ireland's conventional wisdom in their lives.

I suppose that's why they are deep in the establishment. The establishment rewards conventional thinking. In this regard, Mr Whitaker, it appears, was different.

He had the courage and the intelligence to see through the Irish conventional wisdom of the 1950s and realise that our future was an open, trading future, rather than the neurotic isolationism of De Valera and his ilk.

It is hard to overstate how revolutionary Mr Whitaker's alternative vision of Ireland in the 1950s must have seemed to the old Civil War warriors. Here was a young economist telling them that everything they had believed was wrong. Their conventional wisdom was leading the country down an economic and social cul-de-sac. Even though it appears totally logical now, Mr Whitaker's plan for Ireland in the late 1950s was a radical departure from the economic conventional wisdom and status quo of the previous 45 years.

The term "conventional wisdom" was coined by JK Galbraith to describe ideas that are so commonplace and accepted in society that they are resistant to facts that might diminish them. Conventional wisdom is articulated and upheld by conventional people. The conventional man, according to Galbraith, is the type who "when faced with the choice between changing his mind and finding proof not to do so, gets busy looking for the proof".

Therefore, the conventional man dismisses those people who question the conventional wisdom as cranks, mavericks or eccentrics. This is how conventional wisdom becomes a self-evident fact rather than just an idea or policy to be questioned, debated and ultimately overruled, if necessary.

EU Commissioner Phil Hogan
EU Commissioner Phil Hogan

The conventional wisdom in time becomes a slogan, which replaces hard thinking. This conformity of view makes those who repeat the slogan highly susceptible to groupthink.

Because Ireland is a small country, groupthink at the top can take hold quickly. We saw this most recently with the 'soft landing' brigade during the boom.

Ultimately, as Galbraith observed, conventional wisdom is rarely, if ever, overturned by some brilliant countervailing argument that persuades the conventional man to change his mind. Conventional wisdom is only brushed aside by the great march of events. Recently, in Ireland the economic collapse was the event that smashed the 'soft landing' conventional wisdom.

Back in Mr Whitaker's day, the great event or series of events was the abject failure of the Irish Republic to provide a living for its citizens. In the 1950s, close to half a million people emigrated to England alone. The State was bankrupt, out of ideas, close to collapse and quickly running out of people.

Events forced the country to change course, allowing us to forge a new future and open up. Had the economy not collapsed in the 1950s, the isolation of De Valera might have continued for another 10 years.

That change of course and that opening culminated, together with the UK, in Ireland joining the EEC. There was never any question of Ireland joining the EEC without Britain. We joined in 1973 with the UK and Denmark. The rest is history, the history of our lives.

I wonder now, 44 years later, whether Ireland's EU membership is a similar accepted truth like the Ireland First policy of Dev and his mates? Is it a kind of slogan that has replaced hard thinking, leaving us susceptible to groupthink?

The conventional wisdom now is that Ireland's economic development has been the result of EU membership. This notion has become so ingrained that even to question it is dismissed by the mainstream as the work of a crank.

However, it seems to me that questioning the EU will become more and more commonplace in the years ahead, not least because our economy became more Anglo-American after we joined the EU than it was before we joined.

Furthermore, there is a significant strand of EU thinking that believes that the best response to any EU crisis is more and deeper federalism. Federalism is written in Brussels' DNA and this implies more and more dilution of sovereignty. This is not in our short-term or long-term interest because our economy is in the Atlantic orbit rather than the European space.

This dichotomy explains why Ireland is regularly cited as either the fastest growing or deepest slumping European economy. Have you noticed that we are never in the middle?

The reason for this is that Ireland isn't a European economy in the true sense of the word. Ireland is a global economy that happens to be in that part of the Atlantic Ocean that is closest to the European continent. That accident of geography doesn't make us a continental economy in any material way. Consequently, it is meaningless to say we are the fastest growing economy in Europe because the economy isn't European at all. It would be more accurate to compare us to a state in the USA because our capital base and trade is American.

Economically, we are Connecticut with lousy weather.

Geo-strategically, Ireland is like the jockey riding two horses: the EU political/diplomatic horse and the Atlantic economic/investment horse. When the horses are moving together, the jockey's position is tenable. When they move apart, the jockey's position becomes more awkward.

We now do more trade with America and Britain combined than with the EU. The Americans are by far our biggest investor and when Irish people lose their jobs, we still go to England looking for work. These are the economic facts.

But equally, much of the investment is here because we are in the EU's internal market.

As a result, it makes sense to tread the fine line between the Atlantic and the Continent, avoiding any dramatic choice between the two. However, events may not allow us to do so. And events shatter groupthink. If you doubt this, just ask the 'soft landing' brigade in Merrion Street.

My fear is that rather than remaining open to the possibility that the world is changing, not just with Brexit, the Apple tax issue and Trump but with Le Pen and a myriad of other political and economic factors, Official Ireland is digging its heels in, embracing the conventional wisdom even more tightly than before.

For example, at the clear behest of his paymasters, this week the EU Commissioner Phil Hogan warned that Ireland should avoid "excessive reliance" on the UK. In an ideal world who would disagree? But the fact is that we are deeply intertwined with the UK, much more so than any other EU country. Brexit will be asymmetric. It will affect Ireland more than any other country.

But consider the language the commissioner used because it reveals the mindset.

What does an "excessive reliance" on the UK mean? When you got a job in London because you couldn't get one in Ireland, was your reliance on the UK excessive? Is your cousin from Birmingham with the Brummie accent, and the Irish passport, being excessively reliant? When people in England buy Irish butter, meat or lamb, is that a commercial choice or excessive reliance? Should we be arguing that they buy less? When you support Manchester United or Liverpool, is that excessive? When we watch excellent programmes on the BBC, are we being excessively reliant? When the UK Treasury offered us a no-strings-attached loan in 2010, were they being excessive? When a few of the hundreds of thousands of English tourists to Ireland buy a pint in Connemara, is that pub excessively reliant on Britain?

Only a politician whose wages are paid by Brussels would say something as meaningless.

There is an echo chamber in Brussels that wills away the iron law of economics, which is that we all rely on each other. Because of history, geography and culture, we and the British are intertwined.

This European federalist talk is unrealistic. In truth, it's worse than unrealistic, it is not in Ireland's interest.

What is in Ireland's interest is to remain as open as possible to all sides. This means that we need to object to further EU integration. We should not do what the British did. Rather than leave the EU, we should promise never to leave. They can't kick us out. We should stay on our terms and should say we've had enough of this federalist carry-on. Like Denmark and Sweden, who both stayed out of the euro, we should say no more. No more tax harmonisation, in particular. Are Denmark or Sweden any less European for not being in the euro? No, they are just small countries that stand up for their own interests.

With Britain gone we will have to stand up for ourselves in a more robust fashion if needs be. My hunch is that the EU's reaction to the British leaving will be a move for deeper integration.

We have to be flexible and try to navigate among all.

And, of course, if Le Pen wins in France, the EU project is all over anyway. She will pull France out of the euro. The euro can't survive without France. If France goes, Italy could follow. Then it's over and we will have to figure out a different set of relationships.

If our political class embeds us too closely with the Europhiles of Brussels, the people will not accept it. The population is much less pro-European than the political, media and bureaucratic elite.

If the conventional wisdom pulls us too far in one direction - the European one - it will swing back and the other end of the spectrum is Irexit - now who wants that?

Irish Independent

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