Economics 17/07/2009: Pathologies of the crisis

If Ireland were a patient, its political democracy would be on its death bed. This is the only logical conclusion from today's An Bord Snip Nua report.

This country is facing a more severe crisis than that of fiscal insolvency or economic depression. This Government, and its predecessors have chosen not to do their duty by the country - they chosen not to govern. Now they have also de facto lost their legitimacy.

The outsourcing of policy decisions to an unelected and unrepresentative external bodies - chiefly the Social Partnership - in the past had a logical culmination in the outsourcing of the crisis management policies to An Bord Snip Nua and Taxation Commission. The fact that An Bord Snip did a decent job in identifying expenditure cuts is a moot point.

The state has paid extravagant salaries to FAS, Forfas, NCC, NESC, Department of Finance, Central Bank, and other policy quangoes to conduct

• analysis of economic and policy conditions in the country for years - they all missed the crisis that was obviously unfolding in front of their eyes, more than that - they directly contributed to the crisis by creating or intellectually underwriting the policies that led us here;
• preparation of policy responses - they all failed to deliver a single implemented policy document of any real economic worth;
• crisis management - they all chose to abstain from engaging in what they were paid to do.

The state has paid billions in wages and perks to an army of civil servants who produce illiterate, embarrassingly childish policies and waste resources, obstructing change and reforms.

An Bord Snip Nua report says this much, yet still leaves them all in their jobs, until they choose to retire and saddles us, taxpayers with the charge of paying their grotesquely disproportionate (by any measure of their competence and/or international comparisons) wages.

CB and Forfas reports this week on Irish economy are the case in point. People who signed these reports earn more than their US, UK, German - you name the country short of some totalitarian oil-pumping hell-hole - counterparts. These reports have zero value, for they contain not an ounce of new information. Their authors will go on working till retirement in permanent jobs, while their bosses will go one collecting wages that are so sinfully out of proportion to their talents, they make them the lottery winners compared to the senior bankers.

But let us get back to the crisis of our state legitimacy.

This Government took the job voluntarily. Their first act in power was to accept huge pay increases for themselves and their senior cronies in the public sector. They have no capacity or legitimacy to rule. Yet our Taoiseach, and his Ministers, collect more in wages and perks than the vast majority of other leaders in mature democracies. Some of our Ministers are simply completely inadequate in positions they fill. We pay them hundreds of thousands in annual wages and millions in pensions benefits believing that if you pay peanuts for a job you get monkeys. What if you pay millions to the monkeys? Will that make them suitable candidates for the job?

Angry yet?

Our trade unionists and anti-poverty NGOs leaders believe that the Government is measured by how it treats the poor not by how much it overpays itself. Fergus Finlay of Barnardo's believes so. This is the morality of such a depraved estate that feudal lords would have cringed. It makes no difference that Barnardo's is a worthy organization pursuing a worthy cause - failing to understand that this state has more than one constituency to answer to (not just the poor), and that the legitimacy of the state objectives (including that of combating poverty) is based on morality of state actions in their totality, Finlay either betrays an amazingly low level of intellect or an extremely high levels of Machiavelian cynicism. Either way - his failure to accept at a basic, DNA-level the moral premises of liberty, legality and democracy make him an unfit public figure, no matter how well-intentioned his direct objective might be.

Our Liberal Left - where are you, Fintain O'Toole, Ivana Bacik and others, to oppose this - believes it is ok for the Government to raid the lower, middle and upper classes, to squander and corruptly allocate billions in public money... as long as their own constituencies are protected. "Give me my dosh", they say, "and we'll close our eyes on what you will do elsewhere," say the Trade Unionists and Finlay's of this world - those who have signed on the dotted Partnership line dividing the spoils of the boom and now have no guts to point the finger at the lack of our government's moral legitimacy.

Under the Partnership agreements and the corporatist policies they enshrined, the entire public finance system, since the departure of Charlie McCreevy, has been run like a crude, unimaginative pyramid scheme - partially out of sheer incompetence and partially out of sheer venality of its managers. One exception is that a sleek salesman defrauding old grannies was replaced by a brutish taxman with the full apparatus of coercion this state possesses.

Bernie Maddoff was a saint compared to this Government. It took billions in arbitrary taxes and wasted tens of billions in arbitrary payoffs to its own cheerleaders. The chart on the second page of Chapter 2 of the An Bord Snip Nua report shows this explicitly. All of this - in the hope that we will raise more taxes come next year. They paid lavish dividends to their Social Partners cronies, their pub and childhood chums, and a vast army of clientilist NGOs and quangoes all of whom apparently have no problem with the state officials at the senior level earning excessive salaries as long as their own cogs and constituencies were greased.

The country is bankrupt: morally first, financially second, economically third. Full stop! Read An Bord's Report and think of John Hurley's of this country - earning more than the US Federal Reserve Chairman earns and more than his ECB boss is paid. Golden Circle is not the by-now bankrupt Irish bankers or developers. The real Golden Circle is the army of top officials, majority of the Social Partners and politicos all of whom are grossly overpaid and all of whom are callous and venal enough not be embarrassed by this fact.