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Analysis/Comment Last Updated: Nov 22, 2010 - 6:57:46 AM


Brian Cowen - - Ireland's Herbert Hoover in denial to the last as curtain falls on the Age of the Irish Scrounger
By Michael Hennigan, Founder and Editor of Finfacts
Nov 19, 2010 - 4:14:50 AM

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EU Economic and Monetary Affairs Commissioner Olli Rehn signing-in as effectively the new Viceroy/Proconsul of Ireland, in the office of Taoiseach Brian Cowen, November 09, 2010. A portrait of Éamon de Valera hangs over the mantelpiece. De Valera founded the Fianna Fáil party in 1926, having sided with rejectionists in the bitter Civil War that followed the compromise peace agreement with the British in 1921. Winning power in 1932, Fianna Fáil built political support in rural areas by allocating confiscated land to supporters and de Valera set the pattern for politics and ethics becoming an oxymoron in Fianna Fáil dominated Ireland, when he had funds that were raised in the US during the War of Independence (1919-1921) diverted for the establishment of the Irish Press newspaper, that ended up in the control of his own family. By clever cloaking of figures de Valera secured purchasing control of 43% of Irish Press Limited for a paltry sum of $1,000.

Taoiseach Brian Cowen who has presided over the terrible economic dénouement Ireland is experiencing, is in denial to the last like the Depression-era President Herbert Hoover. However, the arrival of top officials from the International Monetary Fund (IMF) in Dublin on Thursday marked the fall of the curtain on the Age of the Irish Scrounger.   

Brian Cowen on Thursday denied that the impending international bailout would lead to a loss of Irish sovereignty. He also dismissed suggestions of failure. “I don’t believe there’s any reason for Irish people to be ashamed and humiliated,” he said.

A “contingency fund” is being discussed as up to 30 officials from the European Commission, European Central Bank and IMF, have moved into the Department of Finance and Central Bank.

The decision to use the terms “contingency fund,”''arrangement" or "facility" rather than bailout, was agreed at the highest political level and evokes the struggle of President Hoover with semantics to put a veneer on a crumbling edifice.

The term "depression" was chosen by Hoover, as it was less alarmist than contemporary alternatives  - - see box below.

Finfacts hasn't had to be hit by a boulder on the road to Damascus like some.

The involvement by the IMF is welcome as meaningful reform would not happen without external intervention. The Fund will not insist on raising the corporate tax rate as we are more dependent on foreign companies than any other advanced economy - - they account for 90% of our tradeable goods and services exports.

SEE: Irish Economy: Why should the possible intervention of the IMF be viewed as 'scary'?

SEE: Ireland's Celtic Tiger 2005: Built to last or on a foundation of quicksand?: So as the sands of globalisation, move under our feet, there is staggering incompetence at the heart of government and certainly no interest in contemplating how long will the good times last?

Finfacts has often said that conservative Ireland rules despite the economic crash and its terrible human toll. Glacial change is accepted as the mode of governance and the two-year slow-motion response to the banking crisis was typical: respond only when there is a crisis...usually a dire crisis.

We can now see the consequence of the panic decision on the night of Sept 29, 2008 to guarantee all existing bank debt.

The majority of the Irish people learned nothing from the first period of disastrous mismanagement in the history of the State.

We wrote in Sept 2009 that historian Roy Foster says in his book Luck and the Irish: a brief history of change from 1970‎, that in December 1977, Trinity College professor of economics, Martin O'Donoghue, who was then minister for economic planning and development, promised an "'everlasting boom." In 1978, a public spending fuelled boom in Ireland resulted in a budget deficit of 17.6% of GDP (gross domestic product) - - a record for developed countries according to the International Monetary Fund (IMF), for the period 1970-2008. In the realm of political reform, in the interval, conservative Ireland has left intact and virtually unchanged, what it inherited from the British. Economic reform has been excruciatingly glacial with little progress in opening up the non-tradable service sector to competition, while a culture of Victorian era secrecy protects insiders, be they in the public or private sectors.

In 2010, we will set a new record with a budget deficit of 32% of GDP.

In the Dáil Éireann debate on the new government in June 1997, Fine Gael TD Alan Dukes, made two prescient observations.

Dukes said Bertie Ahern had displayed through his political career an impressive capacity to mediate and resolve problems.
"I hope he finds a way of using that talent to mediate and resolve without it costing the rest of us money. That is a major part of the obligation he now has," he said.

The former Fine Gael leader said the new tánaiste, Mary Harney, had said something very interesting to him on the last day of the previous Dáil.
"She commented: 'I know Minister Dukes does not like soundbites, but if it can't be said in a soundbite it is not worth saying.' She should reflect on that because the electorate told her that in spades during the election. She was clobbered by soundbites and she is now a very junior partner in Government because of soundbites...I hope for the sake of good government, if not for the sake of the parties in government, and for the kind of politics the Progressive Democrats is supposed to stand for - - the party is supposed to be policy driven - - that the tánaiste has learned the lesson that soundbites are inimical to good politics. Life is more complicated than a soundbite and I hope she has found that out."

1977 had marked the entry to Irish national politics of Bertie Ahern, Charlie McCreevy and Mary Harney. Two decades later, on assuming power, the words of French diplomat Prince Talleyrand about the Royal Bourbons, were apposite: "They have learned nothing and forgotten nothing.”

SEE: Irish Economy: Ahern, Harney, McCreevy, Cowen and the other individuals/groups with responsibility for the economic crash

On May 4, 2008, two days before Brian Cowen became taoiseach, I said he had no record of challenging conventional wisdom unlike his hero Sean Lemass (Taoiseach - Prime Minister - 1959/1966) and added: "The dictum of US President Harry Truman that the buck stopped at his desk, doesn't apply in Ireland. In the week of the launch of the OECD report on public service reform, Fianna Fáil TDs were reported to be opposed to the lowering of the drink driving alcohol limit. An issue like that has much more potency than public sector reform and most of the private sector workers who will take the brunt of the current downturn, have no access to the public megaphone in contrast with the farmers and public sector trade unions. 

A half century ago, there was political vision and inspired leadership in the public service. There was also a willingness to sail against the wind as the vested interests of protectionism feared the consequences of free trade in industrial goods. T.K. Whitaker who was the principal author of Economic Development, was focused on preparing the Irish economy that had been so linked with the UK's, for eventual membership of the new six-country member European body that had been created by the Treaty of Rome in 1957. Today, if there is a Whitaker in the public service, he or she is unknown to the public. As for political leadership, the portents do not promote optimism."

An international task force is in Dublin Thursday to begin negotiations over Ireland's debt problems. David Kuo, director of The Motley Fool, and Alan Clarke, UK economist at BNP Paribas, consider the outlook:

Besides the responsibility or lack of it on the part of political leaders, the reaction of the legion of vested interests to the 2009 Bord Snip report on areas of public spending/largesse to cut, told its own story.

SEE: The Waste Land - - Bord Snip, Irish Public Spending Transparency and the motto "Never do anything for the first time"

We concluded: The recent worshippers of the gods of property in the political leadership have switched to blather on the so-called "smart economy" with the help of cheerleading from the politicised State agencies - - as if the ignorant use of American marketing jargon, is going to produce the "high value" jobs, like manna from heaven.

When the Irish were the second-biggest investors in commercial property across Europe, who cared?


We can blame it on colonisation as Africans tend to do, but we need to face an inconvenient truth - -
there is no constituency for parsimony in using public funds.

To the victors go the spoils and vested interests are all socialists when it comes to plundering the public purse.

In Sept 2009, we wrote that a Fianna Fáil minister once called publicly for his department to be abolished - - a rare event in the Irish political system where the modern Age of the Spoilsmen has eclipsed the notion of public service first and self-interest second.

Historian Richard Hofstadter wrote on the last three decades of the nineteenth century in his renowned book, The American Tradition, which was published in 1948: "From the business of industry the business of politics took its style. Accumulating wealth and living richly, the industrialists set the model of behavior for the less scrupulous politicians. The wealth they acquired and enjoyed set standards of consumption and emulation; overflowing into politics, it multiplied among politicians opportunities for pecuniary enrichment. Standards of success in politics changed.

It was not merely self-expression or public service or glory that the typical politician sought--it was money. Lord Bryce found that the cohesive force in American politics was 'the desire for office and for office as a means of gain.' The spoilsmen looked upon political power as a means of participating in the general riches, of becoming wealthy in their smaller ways and by their lesser standards, as did the captains of industry. Never before had the motive been so strong; never before had temptations been so abundant."

In Ireland in recent times, we have what could be regarded as the Age of the Scrounger with the wanton abuse of public funds by what used to be called beggars on horseback.

It has been disgusting to observe how people who, to use my mother's expression, may skin a flea for a ha'penny in their private lives, behave like children in Willie Wonka's chocolate factory when they can flash their credit cards with a €50,000 credit limit; scrounging as much as they can in expensive hotels with family members in tow.

The scrounging has permeated the system and in 2004, I wrote: "It is an irony that the primary beneficiaries of the tribunals - - the lawyers, some of whom are becoming millionaires on €2,500 per day - - are profiting from a similar corrupt system, which gave rise to the abuses that they are investigating."

In 2008, it cost just a mere €220,000 to renovate an office for former Taoiseach Bertie Ahern.

In a fairer world, it would not be too much of a stretch, to understand why the echo of the rumble of the tumbrils on the cobblestones of Paris' Place de Grève, gave heart to the knitting women, embellished or not, in the writing of Charles Dickens.

On June 9, 1954, lawyer Joseph Welch, delivered the withering line: "Have you no sense of decency?" at the Army-McCarthy Hearings in Washington DC, which marked the beginning of the end of the four years of  terrorism waged by the Irish-American Senator Joseph McCarthy.

It could have been often asked in modern Ireland.

Finally, after this dénouement, it will take time for beneficiaries of bubble earnings to adjust to the new dispensation.

Many of them will claim the victims' cross while tens of thousands remain on the dole.

Brian Lucey, an assistant professor at Dublin's Trinity College, recently told the Toronto Globe and Mail. “We need a complete economic restructuring.”

The newspaper reported that the onetime cheerleader of the property boom, has taken a 17% pay cut. His wife, who is a teacher, had her wages slashed by 14%.

As no academic has argued that the average public service pay and pensions so-called benchmarking hike of 9% was justified and the rest can be attributed to a pensions levy - - the annual net cost of a pension, currently one of the best in the world,  for a new public service staff entrant, after the levy is 19%  -- the Luceys are still in the money in common with many others.

William Manchester (1922 – 2004), author of popular biographies on Winston Churchill and Douglas MacArthur and the controversial chronicler of President Kennedy's assassination, had his book The Glory and the Dream: A Narrative History of America 1932-1974  published in 1974.

It's an excellent read and presents a sense of the times starting with the Depression, through extensive use of contemporaneous newspaper and magazine reports, combined with sharp analysis.

Here is a sample on President Herbert Hoover:

Riffling through Hoover's papers, one sometimes has the strange feeling that the President looked upon the Depression as a public relations problem -- that he believed the nightmare would go away if only the image of American business could be polished up and set in the right light.

Faith was an end in itself; "lack of business confidence" was a cardinal sin. Hoover's first reaction to the slump which followed the Crash had been to treat it as a psychological phenomenon. He himself had chosen the word "Depression" because it sounded less frightening than "panic" or "crisis."

In December 1929 he declared that "conditions are fundamentally sound." Three months later he said the worst would be over in sixty days; at the end of May he predicted that the economy would be back to normal in the autumn; in June the market broke sharply, yet he told a delegation which called to plead for a public works project, "Gentleman, you have come sixty days too late. The Depression is over."

Already his forecasts were being flung back to him by critics, but in his December 2, 1930, message to Congress -- a lame duck Republican Congress; the Democrats had just swept the off-year elections -- he said that "the fundamental strength of the economy is unimpaired."

At about the same time the International Apple Shippers Association, faced with a surplus of apples, decided to sell them on credit to jobless men for resale at a nickel each. Overnight there were shivering apple sellers everywhere.

Asked about them, Hoover replied: "Many people have left their jobs for the more profitable one of selling apples."

Reporters were caustic, and the President was stung. By now he was beginning to show signs of the most ominous trait of embattled Presidents; as his secretary Theodore Joslin was to note in his memoirs, Hoover was beginning to regard some criticism "as unpatriotic."

Nevertheless, he persevered, pondering new ways of waging psychological warfare. "What this country needs," he told Christopher Morley, "is a great poem." To singer Rudy Vallee, he said in the Spring of 1932, "If you can write a song that will make people forget the Depression, I will give you a medal."

Valee recorded "Brother ,Can You Spare A Dime?"

 We conclude with a poem by William Butler Yeats, which was published by The Irish Times during a general strike by workers in Dublin.

September 1913

What need you, being come to sense,

But fumble in a greasy till
And add the halfpence to the pence
And prayer to shivering prayer, until
You have dried the marrow from the bone?
For men were born to pray and save:
Romantic Ireland's dead and gone,
It's with O'Leary in the grave.

Yet they were of a different kind,

The names that stilled your childish play,
They have gone about the world like wind,
But little time had they to pray
For whom the hangman's rope was spun,
And what, God help us, could they save?
Romantic Ireland's dead and gone,
It's with O'Leary in the grave.

Was it for this the wild geese spread

The grey wing upon every tide;
For this that all that blood was shed,
For this Edward Fitzgerald died,
And Robert Emmet and Wolfe Tone,
All that delirium of the brave?
Romantic Ireland's dead and gone,
It's with O'Leary in the grave.

Yet could we turn the years again,

And call those exiles as they were
In all their loneliness and pain,
You'd cry, 'Some woman's yellow hair
Has maddened every mother's son':
They weighed so lightly what they gave.
But let them be, they're dead and gone,
They're with O'Leary in the grave. 

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