Thursday 27 October 2016

Seeing red over so-called green shoots

IMF boss Christine Lagarde said last week that Ireland is 'fixed'. Gene Kerrigan would beg to differ

Published 10/03/2013 | 05:00

Enda Kenny greets Christine Lagarde, Managing Director of the International Monetary Fund, ahead of a meeting at Government Buildings
Enda Kenny greets Christine Lagarde, Managing Director of the International Monetary Fund, ahead of a meeting at Government Buildings

LAST week's visit by Christine Lagarde, head of the IMF, had the air of a state occasion. We're well used to the bowing and scraping that goes on when monarchs stroll among us. By now, word has gone around the global elites, and the visiting ruler is always well-briefed on how to charm the local yokels. Wear something green, start with the "cupla focail" and throw in a quote from Heaney. The usual suspects will melt in puddles at your feet.

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And so it was. Our ruling class lacks confidence (though it reeks of arrogance). Lagarde's mere presence provoked the usual crawling. She's an enforcer whose primary responsibility is to protect the interests of the world's bankers and bondholders – but our elites behaved as if they were welcoming the Queen of Hearts.

Michael Noonan was reported to have blushed in Lagarde's presence. The Irish Times didn't just claim her as a friend of Ireland, an editorial declared her to be a friend with "benefits". I'm not kidding. The Irish Times does not appear to be aware of the meaning of the term "friend with benefits".

Or, perhaps it is aware and I've been missing something. Get up the yard, Paddy, ya boya!

If we dare interrupt the fashionably orgasmic mood of the moment, perhaps we might mention a couple of the stories that got lost in the glow of the royal visit. Lagarde was here to politically shore up the FG/Labour Government as a thanks for its compliance with the austerity policies of the Troika.

"Our plan is working," said Enda Kenny. Keep taking the austerity, said Ms Lagarde. The Irish Times reported her as saying that Ireland is "fixed".

We look around, at tattered public services, at new charges and taxes, as we calculate the time in Darwin so we can Skype our loved ones – and we wonder. The domestic economy crocked, worrying news on exports, the unemployed despairing – and a government acting with undisguised hostility towards its people. This is "fixed"?

A couple of stories plucked at random from the reality around us. First, the bad news. Liam Cunneen-McCormack, from Glanmire, Co Cork, was diagnosed as deaf – after being misdiagnosed, delaying urgent treatment. He's six now, and a prime candidate for cochlear implants, which would allow him to live a normal life. All hail medical progress. In this great little nation, however, having taken on almost half the cost of saving Europe's bankers and bondholders, we can't afford to do twin cochlear implants, so we do them in one ear, unnecessarily handicapping the children.

An anonymous well-off person offered to fund the second operation – at a cost of €20,000 – but health officials fear this would set a precedent that might disrupt services. They've advised Liam's parents to get the job done in the UK. So, the health of our children is just one more thing – along with employment and abortion – that we outsource to our neighbours.

But here's the good news. Success story of the week is Christoph Mueller, head honcho at Aer Lingus. He arrived in the job in 2009 as austerity was being ladled on to all our heads – and immediately took a pay cut. Good man, leading by example.

A pay cut to €475,000.

When RTE's Sean O'Rourke asked if such a pay cut might be seen as "superficial and patronising", Christoph said he wasn't getting a bonus. Good man, yourself.

And last week, the airline – the fortunes of which have since turned around – reported that Christoph is still on a salary of a mere €475,000. Still on his 2009 salary. Now, there's austerity for you. Of course, the annual report did point out that he also now gets a €647,000 bonus. And a €119,000 pension contribution. And "other benefits" worth €52,000. A grand total – and it is grand – of €1.29m.

When an extra €52,000 – more than most people earn in wages – is added on under "other benefits", you know you've arrived.

But there's nothing unique about Christoph. In 1980, the top one per cent in Ireland got 6.6 per cent of all income. It was around the same in 1990. Then, as the semi-religious veneration of the markets came to dominate our society, six times the income of others wasn't enough for the "top people". The one per cent took an increasing share. By 2000 it was 10.32 per cent, and there it has stayed.

The politics of austerity isn't just a set of bad ideas thought up by some economic consultants with dodgy calculators. It's a political tool – from which some benefit and others suffer. Like soft-touch regulation and extravagant pay for the elites, it protects the interests of the comfortable classes. Those at the top took a cut, but those on low and medium incomes have been thoroughly mugged – to the point of denying children hospital treatment.

Incredibly crude policies of protecting the rich, in the hope of a growth in "confidence" and a consequent surge in economic activity, were supposed to have worked by now. They haven't, and they won't.

While the IMF is still publicly extolling the benefits of austerity, behind the scenes there's a bit of a panic. It turns out they've grossly underestimated the negative effects of austerity. They've been pouring oil on a fire. So disastrous has the austerity policy been, right across Europe, that the IMF has been desperately seeking an intellectual platform from which to shape some sort of transition to a post-austerity policy. The ECB will have none of it.

Although austerity has been imposed right across Europe, in this country we had the benefit of particularly imaginative leaders who – on top of the recession – volunteered us to take 42 per cent of the cost of saving European banking.

On this page in 2009 we enunciated two rules: 1) a policy of cutting public spending in a recession makes things worse; and 2) the last thing you do with borrowed billions is give them to bankers. However, Mr Cowen, Mr Lenihan, Mr Kenny, Mr Noonan and Mr Gilmore think otherwise.

Now, we simper and curtsy in the hope that they'll let us stretch out the business of paying other people's debts until 2042. And this will be regarded as a victory.

The Unite trade union calculates the average wage cut from Croke Park II as 4.8 per cent. But when officially-estimated inflation between now and 2015 is taken into account, the union calculates a 9.7 per cent drop in income. A cut in purchasing power of 9.7 per cent will hurt workers. It's also bad for shops and services. Bad for the economy, bad for jobs. And so it goes.

Our current leaders are the prisoners of their past. They're also encouraged in their folly by the dominant media chant from the green jersey brigade – it's all working, we're on the right track. The incessant cheerleading, regardless of the evidence, isn't patriotism. It's easy to stick with a policy that hurts other people when you're cheering from a position of comfort.

Yesterday, in assessing the Lagarde visit, the Irish Times saw – guess what? "Green shoots".

Irish Independent

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