Social democracy in Ireland
Read more about: Economy, National Development Plan, Taxation 
Central Bank board member* David Begg reviews Peader Kirby’s book on the collapse of the Celtic Tiger –
It cannot be gainsaid that the social outcomes were less than were hoped for but the last agreement, Towards 2016, was the closest we have ever come to a social democratic programme in this country. This collapsed in December 2009 and it may be that, like Icarus, we flew too close to the sun in our aspirations.
Social democracy without a social democratic party in government, and in the era when we now recognize that the seeds of a very capitalist crisis were being sown? But anyway, here’s the text of Towards 2016. Begg can certainly claim that it doesn’t reflect an emphasis on tax cuts, notwithstanding the many references to “competitiveness”. Nevertheless, it does read like a document that was written before its real make-or-break element — the size of the the national pay increases — was determined, and it certainly was oblivious to the disaster building up in the financial sector, notwithstanding one reference to the risk of a property crash. But does it deserve the burden that Begg places on it?
*also general secretary of the ICTU.
As “Social Democracy” is a concept with which I am totally unfamiliar I looked it up on the internet. There I found the Wikipedia definition, the Britannica online encyclopedia definition and the Canadian Encyclopedia definition but no concrete example. So can anyone tell me what “Social Democracy” would look like in practice?
Eddie, I think if we had social democracy in Ireland, it would be a mixture of policies from Germany and Sweden which is to say a more elaborate safety net, emphasis on high labour force participation as well as low unemployment (that’s the Swedish part), and higher taxes to pay for all that stuff. All with the ultimate goal of making capitalism safer for the less well-off. We have bits of that in Ireland, but I don’t see anything like the whole package. I think the Sweden-Ireland comparison is particularly relevant because the Swedish approach was more “conservative” than Germany’s and therefore fits the Irish political mood. Sweden had a much better crisis than we did.
Thanks P. I gather then that social democracy means high taxes where I presume the rich support the poor and equal work opportunity for all not just those who are willing to work for next to nothing.
I do not see any of this or even bits of it in Ireland today.
To put it in “natural world” terms, is Ireland today like the bee-hive where all work for the common good or is it like the pride of lions where the females provide the dinner but the big male eats first with the weaker cubs dying of starvation when the going gets tough?
By the way I cannot see our form of democracy (which is obviously based the lowest common denominator i.e. selfishness and greed) as being in any way compatible with social democracy not to mention the common good.
Social Democracy is unworkable in our small open economy.
To adopt Social Democracy Ireland will need to become far more self-sufficient, less reliant on imported goods and develop stronger indigenous, productive industries.
This is for two reasons.
Firstly a high tax model will deter FDI; therefore a country adapting a swedish-style model would need to be less beholden to FDI.
Secondly the aspiration towards a more equal standard of living will again push up wages; therefore an ongoing uncompetitiveness on an international labour comparison needs to be rendered irrelevant by the strengths of a self-reliant economy which of course we dont have.
The idea of the more elaborate safety net- thats a great concept implying as it does both public sector efficiency and a proviso that welfare recipients contribute productively through Govt work schemes etc. We could achieve those aspects of social democracy within an open economy/FDI dependent model without needing to go for a high tax regime if vested interest groups such as the social partners embraced the changes fully.
P,
The composition of government – what you refer to as the absence of ’social democratic’ parties from government – made no difference to the Partnership Agreements that were instituted from 1987 onwards by a series of governments. The fact is that as far back as 1984, the trade unions signalled they were willing to discuss wage restraint in return for lower taxes. In 1986 NESC produced ” A Strategy for Development 1986-1990″ the key point of which was that the continuing high public deficit and high levels of unemployment owed their existence to an underlying problem: lack of economic growth.
The Fine Gael/Labour government of the day, led by Garret Fitzgerald and Dick Spring, didn’t respond to these signals. But the incoming FF minority government under Charles Haughey in 1997 did; and the result was the PNR incorporating the main elements of the NESC strategy and in which wage restraint was accepted in exchange for promises of tax cuts of £225m (though considerably more than that was delivered over the programme’s lifetime.) The PNR, arguably, also facilitated the then government in pushing through some pretty savage cuts in health and social services and did precious little to alleviate unemployment; but it was successful in restoring growth in what had been a stagnating economy.
One might have expected that the Progressive Democrats with their liberal economics ideology would have sought to dismantle partnership when they became FF’s coalition partner in 1989, and again when that partnership was ressurected in 1997. But as we know, they embraced it fully and consistently, in public pronouncements at least, endorsed its contribution to Irish economic success. The two year FF/Labour COalition didn’t tamper with it either – even though a lot of Labour’s 1992 ‘Spring Tide’ was based on policies advocating greater equality and fairness and social inclusion. (Unemployment was still very high in 1992 and it was obvious to all and sundry that the gap between the ‘haves and ‘have-nots’ was widening, even as the economy was growing and the public finances had been stabilised.) It was the tri-party Rainbow Coalition that created the ‘third pillar’ of social partnership, bringing in poverty, unemployment and community representative groups into the process for the first time. Post 1997, FF and the PDs continued with this social inclusion model.
Another point worth bearing in mind is that the different pillars of social partnership had separate functions – the industrial pillar, which effectively comprised ICTU and the employers’ organisations, dealt primarily the economy, wages and taxes in their negotiations with government; the ‘third pillar’s role was to beef up the social policy component of partnership strategy. I think a lot more has to be delved into about how the whole process operated in practice before any generalist claims about a thrust towards achieving a model of social democracy are to be taken at other than face value.
Des Groome’s points above are very well made. It’s about as useful comparing Ireland to Sweden in terms of models of social democracy as it is comparing the Irish economy to Japan’s. In both instances we’re coming from a very different place and such comparisons are ridiculous.
The NESC 1986 growth strategy for Ireland was predicated on attracting inward investment into Ireland, picking winners in the domestic enonomy as exporters and to compete on the domestic market against imports and creating a framework for competitiveness that would make Ireland a profitable location for investors, stimulating growth, wealth and jobs for our people. Right back to the end of the 1950s, Irish governments made a point of issuing invitations to multi-nationals to set up in Ireland. It has been the preferred strategy of successive governments ever since. It’s about recognising the reality, that small open economy thing.
I would argue it worked pretty well for us on the whole until a bunch of homegrown idiots, in politics, business, banking, and all the other revered economic vested interests of our State, developed a bad dose of hubris and lost the run of themselves. Right now, we’re back to dependence on investment by multinationals to put the Humpty Dumpty Irish economy back up on the wall again.
Des: “To adopt Social Democracy Ireland will need to become far more self-sufficient, less reliant on imported goods and develop stronger indigenous, productive industries.”
I remember when that was the aim under DeValera. And it was being achieved slowly. But for the last forty years DeValera has been scoffed at and we became an open economy because we thought we could make quick and easy money by selling ourselves to foreign multinationals who are also only interested in quick and easy money. It was race which we were foolish enough to think would take us to the top but there was only one way it could take us and all too soon it became a race to the bottom from which there is clearly no escape unless we retrace our steps to the DeValera era and start again.
We have the land and what it produces but those who work in it have become the slaves of foreign multinational retailers. We had a decent tourist industry which we made every effort to destroy – building housing estates in the most scenic locations. I heard Minister Hanafin talking the other day about tourists coming to Ireland for the culture. When was the last time you met Irish culture in any hotel, shop or supermarket? We had food processing industries but most of these are gone or are providing only the poorly-paid employment.
I could go on!!
Thanks for that comment Eddie- its a pleasure to read someone express that Dev’s vision wasnt all wrong. Rebalancing the Irish economy and building a society where equality of opportunity might within reason be acheivable will involve putting the old agrarian ideal of self-sufficiency into a modern context and learning to build trade local AS well As hustling for FDI on the world market.