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The Land of Ire

The Irish General Elections have witnessed a remarkable 15% swing to left-wing parties (9.3%, +16 to 36 seats for Labour, 3.0%, +9 setas to 13 for Sinn Fein, 2.6%, +5 seats to the United Left Alliance) but a complete wipe-out of the Greens (down 2.9%, loss of all six seats). The opposition centre-right/traditionalist party, Fine Gael also gained 19 seats and a swing of 8.8%. The previously governing conservative-populist Fianna Fail lost a remarkable 24.2% of the vote, more than 50% of its vote, and 59 seats, the worst result in the party's eighty-five year history. In all probability there will be a new governing coalition between Fine Gael and Labour in the 166 seat lower house (Dáil Éireann).

The election results are being widely interpreted as punishment of the Fianna Fail party (and the Greens, who were in coalition) for economic mismanagement. Ireland's two largest banks (Allied Irish Bank) and the Bank of Ireland were each bailed out for €3.5 billion. The smaller Anglo Irish bank was nationalised when the government determined that a bailout would not save the bank after it had conducted circular hidden loans. The EBS Building Society was also nationalised. These bailouts contributed to the Irish debt levels and the worst recession on record, requiring a EU bailout of some a €85 billion. Needless to say, the cost of such speculation and economic collapse is borne once again by ordinary people who have responded in anger at the ballot box.

The following quote directly from Wikipedia explains the cause of the problems:

Morgan Kelly, a professor of economics at University College Dublin, was particularly concerned about the real estate bubble which was reaching its climax in the summer of 2006. He noted that a fifth of Irish workers were in the construction industry and that the average price of a home in Dublin had increased 500% from 1994 to 2006. He published a news article in the Irish Times, asserting that Irish real estate prices could possibly fall 40 - 50%. His second article was rejected by the Irish Independent and lingered unpublished at The Sunday Business Post until the Irish Times agreed to run it in September 2007. Kelly predicted the collapse of Irish banks, which had fueled the rapid rise of real estate by increasingly lowering their lending standards and relying on foreign cash infusions.

Once again there is confirmation of the general principle that monopolistic speculation in our commonwealth has to be prevented. Instead of a source of individual gains through economic rent-seeking with periodic general collapses in the economy, real estate (i.e., economic land) should be the primary source of public income in preference to all others for reasons of economic efficiency, productivity and social justice.

How is the new government likely to be different? Both Fine Gael and Labour have emphasised employment as their highest priority, a reflection of very the high rates of unemployment experienced in recent years. Fine Gael has adopted a neoliberal economic agenda which argues that budget cuts will act as a spur on employment growth, hoping that this will also reduce the country's debt (in true motherhood fashion, they target "waste") in preference to tax increases and infrastructure expenditure. Both Fine Gael and Labour support strategic loans for small and medium businesses enterprises and focussing on education expenditure. As a thin ray of common-sense, Labour is also committed to removing "Upward Only" rent increase clauses that exist in any many lease contracts.

What is notable in this election is that 36% of the population voted for the various left-wing parties (Labour, Sinn Fein, United Left Alliance, Greens), traditionally very small in Ireland, usually struggling to achieved 20%. Despite this change, and this opportunity the possibility of further alliance building among the left will be extremely difficult. A realistic outlook is tempered with a high level degree of pessimism. The now-governing Labour Party will find itself the junior partner of aggressive cuts in public services initiated by Fine Gael. The Greens will take an oppositional perspective to Labour and remain the junior partner with Fianna Fail. Neither will contenance working with Sinn Fein, and as for the United Left Alliance its members include former Labour members, disaffected with that party's selection process? Is it really possible under these circumstances that the left will be able to work together as a united front in the parliamentary and extra-parliamentary arena?

The reality is that the left must work together in Ireland, despite organisational loyalties and institutional inducements. Fine Gael, working with the EU and IMF, have already announced their 'slash and burn' approach to public services to deal with a financial crisis caused by the landlord class and the banking establishment. Labour should take the opportunity as a coalition partner to resist cuts to public services and argue for higher taxation rates on speculative gains. The Greens could certainly become involved in pushing for Pigouvian taxes. The success of the United Left Alliance could be continued through the extra-parliamentary arena where they have a particular strength and there is certainly no reason why Sinn Fein cannot continue to do so as well, especially in the northern regions which it has notable strength. That party also has the obvious opportunity to appeal to those in Fine Gael who will find themselves inevitably disaffected by the new government's financial austerity against ordinary Irish.

But who can say whether these opportunities will be taken up when there is more obvious inducements from parliamentary privilege and fractious infighting?

Commenting on this Story will be automatically closed on May 8, 2011.

Comments

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Apropos the article, Ireland now looking at site rentals.

http://www.kilkennypeople.ie/news/local/noonan-calls-on-fg-dissidents-to...

For St. Patrick's Day-- a lesson from the Irish. Like Spain and other European countries, Ireland experienced a building boom and bust when most of the rest of the world did.

Unlike Greece, Italy and Spain, the Irish bit the bullet early, slashed spending by the government on social programs and went on an austerity diet.

Hasn't worked.

http://www.irishtimes.com/business/economy/ireland/irish-economy-to-be-f...

Remember this? When Greece, Spain and Italy were doing everything they could to avoid cutting spending as they were dragged kicking and screaming into Eurozone bailouts, the Irish took their medicine directly and with little complaint:

http://www.reuters.com/article/2010/12/07/us-ireland-idUSTRE6B62IE20101207