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/