In Ireland, our reliance on being cosseted by the State affects the very nature of our economy
Pro-democracy protesters switch on their mobile phones in an act of defiance in China – but China is a socialist economy.
Governments have just two jobs to do: collect taxes and distribute the money.
In a democracy, governments that regularly face election must have a care that the taxes they impose do not seem so severe as to provoke an adverse reaction among the populace.
For the same reason they must try and persuade the electorate that they are using the money they collect in a manner that is both wise and fair.
Where there is no democracy, like in China, the government does not have to be so circumspect. A vision is articulated and all the resources of the state are channelled towards achieving that goal, without much concern for the worries or fears of individuals or individual groups.
They can do that because China is a socialist economy, with a little bit of capitalism, and the state is all powerful and does not have an electorate to keep sweet.
Ireland is a democracy with a capitalist economic system, so our situation is much different. Or is it?
Let’s look at the way we do things here. In model capitalism, the government would collect from the working population what could be afforded and no more, and then allocate those resources to the four pillar services – security, health, education and social welfare. But the allocation would be on the basis of what could be afforded, not what was thought desirable.
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That isn’t actually anything like the way we do business in this country. Here we decide, mostly on the basis of pandering to one pressure group or another, what services the government will fund and to what extent. Then we set about getting the money to pay for it.
That means the ability to pay ceases to be a consideration in the tax code. The priority is the amount of money that the government decides it needs. This imperative is corrosive and leads to the inevitable conviction that you must forget completely the question of whether or not we can afford what we would like to have. The only legitimate question allowed is: Where can we find the money?
Right now we have just over one million people at work. But 300,000 of these work for the State. They do not produce anything that can be sold for real money. Their salaries are paid by the taxes on the remaining two-thirds who do. Add in another sizeable chunk of the available-for-work population who are on social welfare, (and that’s just part of the total dependent on the State in one way or another) and you can see that the burden on the average productive worker is skewed in a bad direction.
And that is before we pay for the many other extra services not embraced by the necessary pillar services. Funding for sport, for example, for the arts, to mention just two. Lovely to have, but necessary? Did Mick O’Connell need a grant to persuade him to play football? Did the theatre fade away and die in the 50s and 60s when it depended mainly on its own resources or private donations?
If you are making that argument you will be told you are missing the point. That everything cannot be measured in value for money, and that you cannot put a price on culture.
Well you can actually. You can when you have to put your hand in your pocket and pay for it. And in the good times most of us would gladly do so. That is not Philistinism. It is Micawberism if anything. Because when government gets the idea that anything they decide they want must be paid for, it leads them down the financially ruinous path of borrowing – not necessary borrowing, but insane borrowing.
So we get to the stage where borrowing is seen as the simple answer to everything. Even with the average productive worker taxed to the hilt, you can’t afford the number of civil servants you have, no problem: borrow. And you cannot afford to pay them salaries in excess of what the average productive worker is earning: borrow.
Nothing is too much for the State to take on. The biggest industry in the country – agriculture – is unsustainable. It cannot survive as a commercial entity. Don’t worry, we’ll subsidise it because we have to have all our food produced here. We can borrow for that too and get grants from Europe, which is really just some of our own money coming back to us.
Europe will help us out too with vast infrastructural projects on which it doesn’t really matter if we drop millions through inefficiency and carelessness. It would matter in a properly functioning capitalist democracy, but sure it’s only public money, so who cares. And that’s not the half of it. Over the decades, think trains and boats and planes – and buses. Think how private buses, for example, have been bullied off the roads to protect a State monopoly.
If all the borrowing gets so big that really we can never envisage it being fully paid back at any time in the foreseeable future, it becomes a way of life. And when the bad times come, those huge borrowings leave us vulnerable and defenceless.
Under the capitalist system we would have some defence. We would play hard ball with the hard ball adventurers who gambled on our willingness to always roll over. But we have become so used to applying the socialist solution to everything, that we even apply it to other people’s debts. We absorb banks’ borrowings as sovereign liabilities. Like a drunk in a bar we insist on picking up everyone’s tab – even the tabs of people far richer than ourselves.
We do all this because after more than 60 years as an independent republic we have become like China – a State that is essentially run on socialist lines with capitalism edged to the margins. Yet we still can’t seem to look after our disadvantaged and our most vulnerable. Bertie Ahern was wrong to think he stood alone when he declared himself a socialist.
You might think resembling China right now would be a good thing, given it is the most successful economy in the world. Well, yes, we have many of the traits of socialism, but unlike China we don’t have the benefit of being unafraid to take the hard decisions. Instead we substitute an endless cycle of promises made and promises broken.
We might as well face it, we are a socialist state. We’re just not very good at it.
