Wednesday 13 November 2019

Thomas Molloy: Celtic Tiger legacy may yet transform our nation

Thomas Molloy

PORTUGAL and Ireland share a rugged coast lashed by the same Atlantic waves, an indifferent cuisine and some of the most mournful folk music in the world, but they are very different countries and the origins of Portugal's financial crisis could not be more unlike the reasons behind our own problems.

In a nutshell, Portugal's economy has hardly grown at all over the past decade, while the country's population has remained among the worst educated in the OECD. Visitors to the Algarve probably don't notice this, but it is evident in the large cities such as Lisbon, Oporto and Braga, where one can still sometimes see women dressed in black carrying heavy shopping on their heads from the 19th century trams and funiculars.

Portugal is what Ireland might have been had de Valera lived another 20 years and Sean Lemass never become Taoiseach: a tough, self-sufficient and inward-looking country with a low life expectancy.

Portugal has not chased growth like we did and there are few of the mournful side effects of the Celtic Tiger: no ghost estates, no astronomical unemployment following a construction bust, and no bombed-out banking sector utterly beyond repair.

That it is why Portugal's 10.6 million people are asking for a bailout that is about half the size of our bailout when measured per head of population. We partied too hard while the Portuguese enjoyed a decade-long siesta. There is no great moral difference between staying up all night and going to bed at 10, but it does have very different long-term effects and it will be interesting to watch how the two countries now cope with Dr Chopra's remedies.

It is a common complaint here in Ireland that we have nothing to show for our spending binge, although this is demonstrably not true. The country now has an excellent road network, a large amount of office space, enough houses to shelter everybody and several new hospitals. Some of it was built badly, some of it was built in the wrong place, but not everything has been a mistake -- and perhaps even Terminal 2 at Dublin Airport will one day be full.

For better, or for worse, Ireland has physically been transformed by the borrowing splurge, but I believe it has also been psychologically transformed in ways we have yet to appreciate.

There is a level of ambition here, an understanding that being wealthy was fun, which will be hard to forget and which may just inspire us to repeat the process in a more sustainable way.

The Portuguese can console themselves this week with the comforting thought that at least they are not Irish and they are not sitting in the middle of what may well be the worst banking crisis in history. There was no rush to the head and Lisbon's beautiful city centre has not been defiled by bent developers and county councillors.

This is all true but it misses another truth, which is that there is no obvious way out of Portugal's problems. Growth in these difficult times is not really an option if it eluded the Portuguese in the days of easy money. Austerity has already crushed the economy, leaving no obvious financial tool to get the EU and IMF off the country's back in the years to come.

On a day when Japan was struck by a second major earthquake and Portugal began to come to terms with the possibility of a second IMF bailout in a generation, it was impossible not to think of the 1755 earthquake which completely destroyed Lisbon and was so powerful that it was felt in Cork.

So many died, including nuns and friars, that philosophers doubted for the first time publicly that a god could exist. It was a moment when old orthodoxies were swept away and the Enlightenment went mainstream.

Today, we may just be seeing something similar. Capitalism has endured an earthquake every bit as destructive as those that destroyed Lisbon and Fukushima. In the aftermath of this financial tsunami caused by incompetent bankers from Detroit to Dublin and Dusseldorf, we have seen that real capitalism is as elusive and difficult to practice as Communism. The rich and powerful here and elsewhere have distorted the basic tenets to ensure that they walk away almost unscathed, while individuals, communities and entire countries go down in flames.

When countries as varied as Ireland, Portugal and Greece all fail for different reasons, then there must be something wrong with the system.

Of course, the euro has played a role but something else is also at play. It took Voltaire and Goethe years to puzzle through the meaning of the 1755 earthquake and it will take us just as long to understand the slow-motion destruction of so many countries since the credit markets first froze in the summer of 2007 and understand why some were destroyed and some were saved. The world is not so different to the days after the Lisbon cataclysm when Voltaire wrote:

And can you then impute a sinful deed

To babes who on their mothers' bosoms bleed?

Was then more vice in fallen Lisbon found,

Than Paris, where voluptuous joys abound?

Was less debauchery to London known,

Where opulence luxurious holds the throne?

Everything changes and everything stays the same.

Irish Independent

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