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It’s time the State and super-rich paid for a fairer Ireland

By June 20, 2016Blog


One-upmanship has defined wealth creation and its distribution in this country. It’s time the State, the super-rich, and public sector elites paid for a fairer Ireland, writes Eddie Hobbs

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To get a Yank out of the scratcher simply yell that if he gets down to the kitchen he’ll make a thousand bucks, but for Paddy, what still works best is to whisper in his ear that if he doesn’t, his next door neighbour will make the money.

This truism sits behind the politicisation of the Irish budgetary process, which is swamped in the politics of the loudest screaming baby and is barely fit for purpose in normal times. Passing razor blades will be easier than passing a budget in the current scramble and whatever government emerges, it will be expected to perform that task while tap-dancing on a trapdoor.

Ideally, powerful joint Oireachtas committees, backed by experts, ought to be proposing the allocation of scarce resources to the Dáil as the centrepiece in budget formation.

In a calm and professionalised system of budgetary control, power blocks making additional claims would have these first vetted by a beefed-up Fiscal Advisory Council and that includes arbitrary claims to ‘restore’ Tiger era privileges that includes damaging pay premiums over the private sector.

The opaque process that rewards insider power first and anything else second, is set to deliver tit-for-tat claims for pay rises, claims that compete directly against general cuts in the USC that would benefit all.

In the recent round of conferences, young teachers aired legitimate grievances about their yellow-pack status, lower pay for the same work as their colleagues. This is just the beginning, but the solution isn’t to fix the injustice for some, but for all and that means Ireland’s entire workforce and includes tackling pernicious misuse of zero hours contracts and other practices that diminishes work quality.

The underlying problem isn’t just that of relative pay differentials, between the private and public workforce, but the changing nature of human longevity and of work itself.

Torching critics on stakes outside of Sitpu headquarters as an offering to socialist deities won’t alter that essential truth nor stave off fundamental changes that have yet to come, if Ireland is to avoid social fracture from inequality.

Nineteenth century German chancellor Otto von Bismarck set the first retirement pensions at age 65 for good reason — the average age of mortality in Germany was in the 50s. With mortality shortly to reach the mid-80s, it is sustainable to guarantee jobs for life and pensions that last longer than half one’s working career, only by seeking a massive transfer of wealth from the majority who won’t benefit, to the minority who will.

This is at the heart of the unjust Irish social contract and remains the most unspoken and inconvenient truth among the political classes. Without dramatic corrective actions, the welfare state as we know it, is heading for the rocks.

What is needed is an interconnected strategy that first transforms Ireland into a genuine enterprise culture capable of dealing with aggressive competition from the UK in the impending war for talent — and that means a rethink about how we tax against high work performance and fail to match the UK as an incubator for SME job growth, without which much of rural Ireland will continue to wither while the economic fruits concentrate around foreign direct investment (FDI) in urban clusters, exacerbating the housing crisis.

It also means starting an adult conversation about how Ireland can use the dividends from indigenous enterprise growth to deliver a basic lifestyle standard, properly funding our social insurance programmes, redesigning the rules to reflect longer lives, higher health costs and elder care and phasing in a universal pension scheme that does not distinguish between workers on the basis of when they were born, whether they work for themselves, for the State or for a private employer.

We also need to discuss if lifelong security of tenure, that includes premature retirement rights, ought to be recovered using benefit-in-kind taxation.

Economic stagnation has been avoided throughout the course of the modern industrial age by technological breakthroughs that have turbo-charged worker productivity, rewarding higher output through higher living standards, pay, leisure time, and asset accumulation, but the deck has become stacked in favour of the super-rich whose net assets accumulate faster than workers can put excess income to work.

The sickening revelations from Panama of industrial-scale tax evasion by some ought not to blind us to the compliance of the many but the solution isn’t the aggressive and isolationist wealth transfers promoted by traditional hard left economics — these collapse from beggar-thy-neighbour tax competition from bordering economies, but rather in collective action among sovereigns in Europe and through international agreements.

The might of mobile FDI and the increasing power of the global super-rich can only be tackled by acting together but solutions that propose pricing against them in isolation will worsen outcomes through the flight of capital, talent and jobs. This is an iron rule.

Dreamy-eyed socialists such as President Michael D Higgins, who argue most frequently from pulpits within the security of the State, advocate for ever more of it and visualise a world that cannot exist, one populated by risk takers who are driven, not by individual incentive, but by social solidarity.

Look around and of all the technology you relied upon today, from the mobile phone to your car and TV, none of it was invented by a State agency or by a mythical entrepreneur energised by equality.

The path that remains to be found is how to develop a flourishing enterprise culture but within a social contract that supports and not worsens solidarity.

Sadly, without dramatic change to how we do politics and govern, that path is unlikely to be invented here, not so long as we first measure each spoonful our neighbour gets, before tasting our own and tolerate a political system that dines upon the differences.