Tuesday 12 December 2017

The real lesson is, all our leaders would have done much the same

The politicians who should be mistrusted are those who claim to know all the answers, writes Eilis O'Hanlon

REVEALING COMMENTS: Mary Harney told the Inquiry that the essentials of economic policy were accepted by all sides and few ever challenged the numbers
REVEALING COMMENTS: Mary Harney told the Inquiry that the essentials of economic policy were accepted by all sides and few ever challenged the numbers

Eilis O'Hanlon

If there's one person who should have been taking careful note of last week's appearance by former minister Mary Harney at the Banking Inquiry, it was Joan Burton.

The two women share many similarities. Both are of a similar age. Both worked in education prior to politics. Both rose to be leaders of their respective parties. Both are formidable, capable women who, in office, managed to become lightning rods for discontent so intense that the antipathy they provoke often feels visceral, personal.

Harney was once attacked with red paint by members of the republican group Eirigi; Joan Burton was marooned in her car during the now infamous siege of Jobstown.

It's also not hard to imagine that Mary Harney's anointed role as bete noir to those looking for easy scapegoats for the economic collapse might one day be taken over by Burton. The PDs got the blame for causing the crash by championing light-touch regulation. Labour is getting the blame for not doing more to protect the vulnerable from the side effects of austerity.

That hatred was certainly unleashed again on Harney last week, and it was probably intensified because the former minister in the Fianna Fail-led coalition was so composed in manner, and so straightforward in her responses, that the critics could only rail impotently about her pension.

What did they expect? Not simply of her testimony - that was exactly as one might have anticipated from one who's faced years of hostile questioning from her enemies, not merely a few hours in front of a Dail committee - but from the Banking Inquiry itself?

It was set up as a vehicle to "get" the previous government, to remind voters of its failures conveniently close to the next election, in the hope that former ministers would squirm and wriggle under the spotlight; but can anyone be surprised that it has simply ended up reminding them instead what a small world Irish politicians inhabit, how they were all thinking the same, and would have made exactly the same mistakes?

Harney got that part out of the way right at the start last week. She admitted that previous governments, of which she had been a member, made mistakes, and that she regretted them "deeply". No, she didn't foresee that the explosion of cheap credit would prove so calamitous. ("As I recall, we were assured all was well with the financial system.") Yes, there should have been more robust regulation. Yes, she should have asked more questions.

All of this, however, was not so much a mea culpa as an expression of the current received wisdom about the received wisdom back then.

In that respect, the Banking Inquiry is as much a product of its own time, with all its blind spots that we can't see because we're stuck in the middle of it, as the boom was a product of its own age.

Harney, though, did manage to broaden out the debate by pointing out that it wasn't only the housing boom and individual spending which was allowed to run away unchecked during those years, but public spending also. This is important, because there's a seductive narrative, encouraged at times by the Government, not least in the Taoiseach's infamous message to the World Economic Forum in Davos that the Irish "went mad" with borrowing, and that it was this "greed" spawned by "personal wealth created on credit" which ultimately "went out of control".

It simply isn't the case that the Celtic Tiger was an era of selfish private profligacy combined with a starving of essential services at the expense of the poor. Public spending, including public sector wages, rose sharply during the boom, as money flowed into the Exchequer, and the only complaint from the opposition is that the government of the day wasn't spending even more, despite all the evidence that governments should spend less during booms. Public spending as a share of the economy rose between 2001 and 2008 from 35pc to 50pc.

For all the outrage over cuts, public spending as a proportion of national income is still higher than most far wealthier countries in Europe.

Irish people now tend to look back at the Celtic Tiger with the opposite of rose-tinted spectacles, imagining that it must have been one long calamity - because didn't it lead to ruin? - when the truth is that the country was happier and more confident than it had ever been. Forced emigration was eliminated for the first time in Ireland's history. Deregulation was all the rage. As Mary Harney told the inquiry, the essentials of economic policy were accepted by all sides and few ever challenged the numbers. Even the Left didn't object that strongly to the way money was being made, they simply wanted it spent in different ways, most of which would have increased public s pending further and therefore exacerbated the crash.

When it came to the night of the Bank Guarantee, there have been differences in detail as to evidence given at the inquiry about whether and when ministers were told that the banks were insolvent, but the same overall pattern has emerged. Politicians who didn't know what they were dealing with being misled by the banks as to the nature of the problem, the extent of the problem, and, most terribly, how to fix the problem; all stumbling into disaster. Not out of malice or stupidity. They'd all have done the same if put in the same impossible situation. Merely because the problem was bigger than they knew how to handle.

That's the real lesson of the Banking Inquiry, even if it wasn't the one its founders hoped to teach. "If you ask me," said Mary Harney, "can I put my hand on my heart and say it will never happen again? Then no, I can't do that."

Any politician who says otherwise is either delusional or dishonest - and if they can't promise that it won't happen again, how can they pretend that it wouldn't also have happened under their watch?

Mary Harney attracted most of the attention of the media last week. Understandably so. As a founder member of the PDs, she was an iconic figure in Irish politics for the best part of three decades; and though it all went wrong in the end, that doesn't mean more women with her tenacity and intelligence wouldn't make a welcome addition to the current Dail. All the same, it was probably former Green leader John Gormley, who also gave evidence last week, who best exemplifies the difficulty of trying to attribute blame for the disaster that befell us.

Time and again, when he was asked certain questions, Gormley did what has almost become unthinkable in modern politics: He admitted that he didn't know the answer.

He suggested instead that they ask Eamon Ryan, the current leader of the Greens, who dealt with the banks issue for the party at the time, or even David McWilliams, whose name was mentioned often last week in relation to advice he was supposed to have been giving to the late Finance Minister Brian Lenihan.

Gormley didn't suggest that he got everything right, but insisted that he did try to act, and felt his colleagues did too, in the national interest, and that, in the land of "least worst options", he did his best.

Would you go to him for a detailed analysis of the macroeconomic conditions underpinning the crash? Of course not, but then why expect that of every minister either?

In a world of increased specialisation, where politicians are expected to be able to shuffle figures and jumble numbers with the best of them, Gormley is a reminder that most politicians of the old school don't come from these technocratic fiscal backgrounds. They're teachers, trade unionists, parents, small business people, farmers. They come into politics because they want to make a difference to the issues that matter to them. Social issues, environmental issues, women's issues, children's issues, health, education, foreign affairs. They rarely come into it because they want to micromanage the economy.

They rely on the advice of others in order to drive the economic growth that generates the money that they can then allocate to their preferred areas of interest, and they have been shown to be hostages to fortune when it comes to seriously intractable problems beyond their ken.

Would we be better off if they all became economics professors? Some things would be better, but there's no guarantee that those people would not make equally horrendous, maybe even bigger, mistakes.

One of the lessons of the crash should be that we are more mistrustful of economics experts and their predictions and spread sheets, but fear of failing again has meant that we have become even more enamoured of the boffins, the ones can impress us by giving detailed jargonese to questions about the economy rather than admitting, as Gormley did, that he just doesn't have all the answers.

That makes him less useful to the Banking Inquiry, which continues to be coated with a so far unearned aura of expertise, even as it diminishes daily into little more than an edition of Liveline with knobs on, but did make him seem much more human than all those smug hindsight merchants, all so wise after the event, who seemed to think that the inquiry would be able to provide the definitive version of What Went Wrong, carve it in stone, and then erect it on the plinth at Leinster House as a warning to future generations not to repeat the same mistakes.

They will, together with a few new ones of their own.

Now the circus has wrapped up for what's left of the summer. Unless it comes back in September with a more focused understanding of what it's trying to achieve, it's surely just going to wind up as another footnote in the story of Ireland's post-crash love affair with wallowing.

Sunday Independent

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