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Ever since the bank guarantee of September 2008, there have been countless attempts to explain the implosion of the Irish economy. Most of these explanations have taken a moralistic attitude, laying the finger of blame at the greed and recklessness of those at the tops of the financial institutions which laid waste to a decade of prosperity. There may well be some merit in these views, but the roots of the current crisis run much deeper than a handful of people behaving badly.

This week I finished reading what was undoubtedly one of the best accounts of what happened to the Irish economy four years ago. Published last June, Conor McCabe’s Sins of the Father takes a thorough and serious look at the causes of the country’s economic collapse. Although I own a copy signed by the author himself, Sins of the Father had been sitting on my bookshelf for almost a year before I bothered digging into it. Upon finally reading it, I regretted putting it off for so long.

Sins of the Father is much more than a mere chronological description of how the Irish economy imploded; In the book, McCabe charts in an easily accessible manner the deeply flawed and deformed way in which the Irish economy developed since the partition of the country, taking the reader right up through the bank guarantee, the creation of NAMA and the humiliating EU-IMF bailout of November 2010. Although Fianna Fáil was politically butchered by voters in last February’s general election for their role in the crisis, this book shows how successive governments since the state’s foundation laid the foundation for Ireland’s catastrophic economic collapse.

The book, which is less than 300 pages long, is divided into five subject areas, all of equal importance; housing, agriculture, industry, finance and lastly, the Fianna Fáil/Green Party government’s response to the financial crisis.

The chapter on housing, I found, was a particularly fascinating one, which convincingly demolishes the myth of a ‘property-owning’ gene in Irish DNA. McCabe correctly points out that the high rates of private ownership was a direct result of the political decisions taken by successive governments which consistently prioritised private ownership over much-needed decent public housing schemes. The fundraising organisation Taca, set up by Fianna Fáil in the 1960s, brought into light the shameless cronyism that existed between the political class and property developers, speculators and landlords.

Also wonderfully detailed in Sins of the Father is how Irish governments helped to fuel the rampant property speculation and booming house prices which plagued the country for the last number of decades. High prices opened up a new debt market for banks, while Irish people were forced into taking on ruinous mortgages in order to secure a home. A booklet issued by the government in 1967 advising citizens on home ownership told readers that “the amount you borrow should not be more than the 2½ times your annual income”. By 1998, house prices were almost eight times higher than the average industrial wage. At the height of the boom, McCabe found, “Irish property prices were between eleven and fifteen times the median wage”.

Another aspect of the book which I found not only interesting but profoundly relevant is the author’s criticism of Irish governments’ obsession with foreign investment, to the detriment of the state’s own indigenous industry. He points out that the benefit of having multinational companies based in Ireland was much lower than is often portrayed, stating that the “profits are repatriated to their country of origin”. He continues: “Given such a modest effect on the Irish economy – 7% of total employment and approximately €2.8 billion in corporation tax – why is foreign direct investment constantly put forward as the prime objective of the State’s economic policies and strategies?”

Sins of the Father, McCabe’s first book (and hopefully not his last), admirably challenges many of the lazy myths which pass for economic discussion today and should be seen as a vital resource for those seeking to understand why the Great Recession has had such a profound effect on Ireland.

Conor blogs at www.dublinopinion.com/

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The news that RBS chief Steven Hester has turned down his obscene £1 million bonus has been welcomed by all shades of political opinion. “Banker bashing” has transcended the narrow boundaries of the left and is now part of mainstream discourse, with even millionaire David Cameron spouting populist rhetoric attacking certain behaviour in the City. Mr Hester, however, will have little difficulty getting by on his modest salary of £1.2 million. Perhaps this is the “restraint” that David Cameron is referring to when he harps on about “moral” capitalism.

It might well feel good to attack the activities of “reckless bankers”. However, the problems inherent in the economic system we currently live under run far deeper than that. Certainly, lending huge amounts of money to people who could never afford to pay it back and subsequently selling that debt on to other financial institutions is irresponsible, but this does not address what it is that is wrong at the very core of capitalism.

One glaring absence in most public debates about the economy is the key issue of what actually caused the current crisis. It’s almost taboo to highlight the fact that wages in general have been stagnating since 1980. With the advent of Thatcherism/Reaganism, the assault on organised labour became ever more intense. The defeat of the British miners and American air traffic controllers in the 1980s marked the beginning of the decline of the trade union movement in the two countries. This was mirrored across the world, not least here in Ireland. These anti-union assaults heralded the birth of the most modern form of capitalism; neo-liberalism.

Trade union membership in the UK peaked in 1979, with just over 12 million members. This number has fallen year on year since the beginning of Margaret Thatcher’s deliberate destruction of the British manufacturing industry. Today, just over 6 million UK workers are unionised. The picture in Ireland shows a similar trend. Irish trade union membership peaked in 1980, claiming 62% of the country’s workforce. In 2010, just before the Troika’s “bailout”, less than 25% of Irish workers were in a union. Young people, especially, are less likely to even know what a union is, let alone join one.

The effect decreasing union membership has had on society was entirely predictable; wages fell in real terms and working conditions deteriorated. Last week, a TUC report revealed a number of startling findings. The main one was this; had wages grown at the same rate that the economy was growing over the past three decades, workers in the UK would be collectively earning £60 billion more than they are earning today. The TUC’s Touchstone Blog has a very useful tool on its site called the ‘Incomes Tracker’, which all workers might want to have a look at. It helps put this great robbery into perspective. Say you are earning £21,000 per year. Had your wage risen at the same rate the economy was growing (and remember, workers create all wealth in any economy) you would be taking home a handsome annual salary of more than £32,000. Or, if you are taking home a modest wage of £14,000; you would actually be on a wage of £24,000 had your wages grown in line with the wider economy.

When the economy was growing, the rich were increasing their income accordingly. However, those who were actually working and producing things to make the economy grow received nothing extra for their labour. Despite becoming more productive, workers’ income stayed the same. In many cases, wages actually decreased in real terms. In the US, this reached extraordinary levels. Between 1979 and 2007, the richest 1% of Americans increased their income by 275%. In contrast, the bottom 20% increased their income over the same period by a mere 20%. While some union activists were preaching class war, the ruling class were busy practicing it.

And don’t think for a minute that the pain is now being shared out proportionally just because there is a recession; far from it. Last year the income of the directors of the top 100 companies in the UK increased by 43%. The thousand richest people in the UK fared even better. According to the Times Rich List the total wealth owned by this group of people has increased by 53% since 2009. They now own a combined wealth of more than £400 billion.

It’s increasingly likely that this deep inequality will lead to social catastrophe. There has been only one other period in modern history when inequality was as great as it is now; the decade immediately before the Great Depression.

The race to attack the incomes of workers highlights the sheer irrationality of capitalism. When wages are repressed, demand collapses, as the working class as a whole are unable to buy back to goods it collectively produces. This leads to millions of useful products rotting unsold in warehouses and factories. This is known as a crisis of overproduction. The solution of the capitalist class to overcome this problem is an inherently unstable one; pumping out credit. Instead of raising the income of those who create the products they want to sell, the capitalist class encourage workers to obtain credit cards and stack up mountains of personal debt. Rather than actually overcoming it, the best capitalism can offer is the postponement of a crisis. With personal, commercial and public debt all spiralling upwards over the past three decades, it was only a matter of time before this system collapsed.

However, things are likely to get worse. A lot worse. The internationally coordinated attacks on wages and working conditions, coupled with the destruction of the old social democratic welfare states, will cause consumer demand to collapse. This will lead to a vicious cycle of ever more job losses and company closures, which will collapse demand still further. Even Mervyn King, the Governor of the Bank Of England, has warned of the coming depression being worse than the 1930s. The coming years will see thousands defaulting on personal debts. House repossessions will become more common as people struggle to meet ruinous mortgage payments. The Euro is also on the verge of collapse, with some countries veering towards default. The fact is, the crisis of 2008 was merely a forerunner of a larger crisis about to come.

Tumultuous historical periods such as the current one often witness great calamity. In times like these, the stupidity of those in power should not be underestimated. Just look at the political response to the crisis. Almost all commentators are calling on governments to “get the economy growing again”, regardless of the impact perpetual growth will have on this planet’s fragile environment. We also hear politicians urging the banks to “start lending again” without questioning why we need to run an economy built upon colossal amounts of debt. And the best our geniuses in Stormont can come up with is a proposal to reduce corporation tax.

Despite the frantic efforts of the world’s leaders, no solution will be found to this crisis within the current economic structures. A radical reorganisation of society is the very least that is required to guarantee a decent standard of living for every human being on this planet. Anything less will bring us back to the conditions of the 1930s.