Pointing the finger in the wrong direction

If we're to talk about collective responsibility for the Irish bubble we should at least begin to acknowledge that the story is not broadly one of people going mad… it is one of institutions  going mad. By Nyder O'Leary.

It isn’t that difficult to see how it happened. The leader was never the brightest button. He became leader due to his ability to remain at the head of a shambolic and squabbling party as the opposition imploded. He’d survived as leader by saying, with market-researched precision and carefully-consulted accuracy, exactly what he thought most people wanted to hear.

Oh, Enda. The classic tourist who behaves abroad in a way that would be unthinkable at home. It was just a few weeks since he addressed The Irish People – well, the ones who don’t find hypocrisy to be the most perfect emetic, anyway – and told every single one of them that the crisis wasn’t their fault.

Surrounded by Europe’s most virtuous multimillionaires, he said something different. Thing was, we all went mad.

In Davos, Enda Kenny indulged that most pernicious myth of all; that really, well, you know, it’s everybody’s fault, isn’t it? It’s worth quoting what he said, even if it’s been much-regurgitated:

“What happened in our country was that people simply went mad borrowing. The extent of personal credit, personal wealth created on credit was done between people and banks – a system that spawned greed to a point where it just went out of control completely with a spectacular crash.”

One of the side effects of how the press is structured is that, when somebody important says something, it pretty much has to be taken seriously – even if the sensible reaction to this sort of wurbling is “Sorry, was he pissed?” In fact, a certain amount of debate was sparked, with some wondering whether – really – he had a point. A similar bout of discussion was seen in the UK lately, with criticism of the criticism of banker’s bonuses (that definitely makes sense). This reached its glorious zenith with an Irish Times editorial, which was almost shocking with the way it presented the all-to-blame orthodoxy.

The fact that actually, many people didn’t buy a second or even a first property doesn’t appear to have quite registered with the IT; nor does the cold truth that those people have been, since late 2007, by far the hardest hit. But Enda Kenny said Irish people went mad. Not “some Irish people,” or even “the Irish middle and upper classes”… just people. If challenged on this, Kenny would probably accept that the unemployed and the low-paid and the disabled and the elderly and the generally misfortunate certainly didn’t go mad, not by any stretch of the imagination. Perhaps we should just save time on this and translate the FG-speak of “people” into its actual meaning, “the sort of people that I think vaguely matter. Or at least, whose parents matter.”

(In much the same way, it’s not difficult to translate the “you” of Kenny’s “you are not responsible for the crisis” pre-budget speech as meaning “you, or at least those of you I feel comfortable talking down to.”)

Point is, even if one accepts that meaning, the statement is still garbled, self-serving nonsense. Let’s be clear: a young couple with secure middle-income jobs were not “mad” for thinking they should have a secure home with fixity of tenure, like just about every twentieth-century generation before them. Nor were they “mad” for obtaining that home by doing what every single major institution, financial or otherwise, told them to do.

It isn’t going mad to want security, or a place to live. Nor is it going mad to send your children to university, or to make the investments everybody who’s supposed to know about such things tells you to make. Currently, any mooted policy move on our banking debt is promptly interrogated for its effect on “the markets”. And yet for ten years, a great many Irish people were advised to do exactly what “the markets” allowed them to do… and yes, this includes second properties in Turkey. For many people, those properties amounted to a pension plan; they indebted themselves in the belief that it would pay off in the long run. Stupid as it may seem in retrospect, this didn’t seem unreasonable at the time – particularly since every single institution advised people to do this.

And yet…

…and yet, that isn’t to say the concept of societal guilt is bunk. Huge swathes of Tiger-era culture were irredeemably, unconscionably ugly. It’s moronic and offensive to say that everyone went to Harrod’s specifically to buy handbags, and/or built huge ugly houses in the countryside with seven bedrooms they didn’t need. Some people did do this, and it was… unpleasant.

And yet to call this a “culture of greed” misses the point; what defined the period, if any one thing could be said to define a period, was a culture of preening self-advancement. An end result was that those who showed the most skill at self-advancement were breathlessly portrayed as messiahs, their activities unquestioned and uncriticised; that those who made financial decisions that affected millions of people were seen as above scrutiny, unimpeachable simply by virtue of their position.

Oh, and yes, that’s right… the Irish Times editorial in support of Enda Kenny does include a quote from Denis O’Brien. Which does a better job of discrediting it than any amount of writing here, in truth.

Those who support Kenny talk about the need for us to be able to have a conversation, about blame. I’m a believer in collective responsibility, as it happens. The question of what happened to Irish society during the bubble, and the collective shape that society assumed, is a valid and important one.

But… if we’re going to frame that discussion in terms of debt… well, we should at least begin to acknowledge that the story is not broadly one of people going mad… it is one of institutions going mad. If you want the very rough, back-of-an-envelope, not-at-all-rigorous thumbnail:

- Our political classes deliberately facilitated a housing bubble that caused enormous inflation of house prices, leading to a culture of public indebtedness and a scramble for property caused by no control of pricing and – initially – a huge undersupply.

- Irish financial institutions, in collusion with a small, unscrupulous class of the super-rich, sustained this situation by lending money to people who would be unable to pay it back if the housing bubble burst, believing that house prices would keep rising indefinitely. In effect they rewrote the laws of supply and demand, convincing their customers that the game had changed, in order to chase short-term profits.

- The government completely failed to regulate the financial sector, put in place tax-based property incentives to deliberately inflate the bubble, engaged in and encouraged unapologetic triumphalism and – on one notable occasion – said anyone questioning this economic miracle should “commit suicide”. The result was a culture of business, and in particular property development, in which “entrepeneurial risk-taking” was seen as a virtuous thing that carried with it an automatic entitlement to success.

- Major European banks, including those of Germany, France and the UK, loaned enormous sums of money to Irish banks at extremely low interest rates, but did not carry out any meaningful diligence checks on the asset-books of the banks to whom they were lending, thereby facilitating a huge credit bubble.

- A portion of the Irish population – by no means the majority, but a significant percentage – overextended themselves financially with loans they could not service. Some of these loans were not for necessity but for pure financial gain on the property market. A proportion were, in all probability, entirely frivolous.

A conversation about the last group is somehow seen as healthy debate, rather than self-involved navel-gazing to justify the infliction of poverty on the country’s poorest people. Meanwhile, mentioning the other groups involved is just ducking the issue. Mentioning the foreign institutions, in particular, marks you out as a dangerous subversive lefty nutcase who has yet to say sorry for all the shopping trips to New York you didn’t take.


All this talk of blame misses the point. If we look at the groups named above – the super-rich and the financial institutions, national and international, that stoked the crisis – there’s one clear dividing line between them and those frivolously-borrowing Irish people: it’s that the latter are now – almost uniformly – in a position of financial ruin, while the rest have paid no meaningful penalty at all. Debates about “blame” are meaningless under these conditions; the only question that matters is about fairness.

What burns is that the people who mutter “all of us” are happy to inflict this punishment on others as part of a guilt-assuaging cleansing ritual. Those with the least pay the most; those with the most pay nothing, standing arms-folded in grey suits and murmuring “difficult decisions” in the most moralistic of tones.

Against that backdrop, abstract ramblings about collective societal guilt come across as the rank hypocrisy they so clearly are. It’s myopic, it’s elitist, and it’s pathetic. Enough of this.


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