A Tale of Two Tigers

I listened to two different audio podcasts this week - one from the BBC, Olivia O Leary's From Boom to Bust programme on BBC Radio 4 regarding the so-called Tiger economy in Ireland, and the Guardian's daily business podcast which included a very brief discussion on how the bottom 30% of the population gained little from growth in the UK.

You can find both here and here.

The Guardian's discussion was realistic, and Polly is quite right in saying that a huge percentage of the wealth generated went to the top earners, and the differing levels of success and failure Labour had from 1997 in redistribution that wealth. Some other panelists have suggested that those on welfare suffer least from times of recession since their incomes remain static, however debates in Ireland on the level of income replacement of social welfare and indeed, outright cuts in secondary benefits and direct cash payments for some recipients is flatly contradicting this.

O Leary's piece to be honest, was extremely poor and blithely ignored the hidden faces of Ireland, the large proportion of people either priced entirely out of the housing market, and mostly pushed into extremely poor quality rented accomodation, and another group, who could afford to buy but only in very remote areas or very tiny properties in poor locations. It also ignored the masses of people effectively bypassed by the "boom" - people with a lack of appropriate job skills or experience who couldn't take advantage of the boom, or with a range of financial handicaps that prevented them from fully benefitting. In fact a newly recognised problem is the disproprotionate effect of the recession on the long distance commuters, and its knock on impact on these areas in the greater Leinster area - known as the commuter belt, but there are similar belts in areas such as Galway, Limerick and Cork, which similarly extent 30-40 miles outside the cities in question. In some cases these areas have been in a state of economic decay for many years - for example escalating property prices masked the real economic degeneration in the Youghal and Mallow areas in Cork, both of which were believe to have lost 2000-4000 jobs over the last decade. If this is artificially masked by huge property price hikes (for example in West Cork due to heavy marketing to ex-pat retiree brigades in the UK) then the impact of the recession is in fact a double whammy.

One of the most serious concerns I would have about Ireland's banking bailout is the disproportionate impact of protections for savers in the institutions protected by guarantees as against the removal of credit and possibly even services for those not fortunate enough to save savings at all. So in other words, the poorer people with no savings are being asked to pay extra to guarantee savings of those who could in all honesty afford to save. Since the banks were not given conditions attached to the bailouts to ensure that they would not misuse the cash given, we already have a situation where AIB is using the bailout given to shore up its own share price by buying back baonds and shares. The benefit of this is precisely to employees, especially those at the top, whose incomes are dependent on those very shares. So effectively the banks are not using the cash given to ensure that the economy continues normal lending, the banks are using it to keep the system of investment going.

What I really felt though, about O Leary's programme, was its blithe assumption that Ireland was simply chock full for 10 years of extremely wealthy, loaded young professionals who were "well educated" and "big spenders." In fact, particularly from around 2002 onwards, there was a small but growing level of youngish people who were struggling to cope with the consequences of heavy borrowing. In fact if you look at the archives of boards.ie, you will see a steady increase in the number of people asking for advice on debt. With unemployment at less than 4% this was largely due to temporary changes in circumstances, sometimes brief periods of unemployment that left people out of pocket and behind on payments, and in other cases quite simply due to an inability to stretch payments to all lenders. This gradually and steadily increased throughout the decade and now the debt advice forums are swamped not with people with overstretched borrowings, but huge debts and often extended periods of unemployment.

What I think we primarily need to come to terms with over the next few years is a recognition of how skewed Ireland became because of the tiger years, how an overinflated property market manifested itself as economic "growth" and of how socially divisive and damaging this has been. We need in particular to re-evaluate in particular our attitudes to home ownership, rented accomodation as a home and in how we work with social housing (and not just as a social dumping measure).

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