Bertie Ahern: The Man Who Blew the Boom: Power & Money (38 page)

Lord did not believe that there was any mystery about how a man such as Ahern could have presided over such gross mismanagement of the economy. The interview with Ursula Halligan on
TV
3 some time after he had left office, in which he seemed to be self-obsessed and filled with resentment, illustrated that,

in the heel of the hunt, everything came back to him. It explains the sort of obsession with being in the constituency all the time, and making sure that his majority was secure, pounding the streets of Cabra and the North Strand when he didn’t have to. It was all about him. It all came back to him.

Micheál Martin has no doubt that Ahern’s chief motivation in politics was ‘to genuinely serve the public. I think he had a fierce sense of history, a fierce sense of his father, the old
IRA
. We used to have long chats about that.’ Ahern had a great interest in people’s personal situations and would look out for them. He had a lot of honourable traits. For Martin, the evidence that came from the tribunal was very disappointing. ‘I don’t know what’s behind it.’

Paddy Duffy said ‘the Ahern I knew’ had no interest in money. Ahern for him was a person devoid of self-importance, someone who retained his sense of humility and modesty throughout his years in power. When asked to define the political ideology or vision that drove Ahern, Duffy had this to say:

Bertie and all the rest of us would be driven by a broad, deep-seated Irish Christian democratic [view]: Catholic, not socialist, but doing the right thing in terms of promoting equality of opportunity and fairness. Bertie would have had that, and we all would have had that from our own background. My own feeling is that Bertie actually developed his views as he did things. He didn’t come to the table with a set view of how things should be done, but the philosophy evolved through doing it, and at the end, when it was done, you could look back and say, Ah, my goodness me, look what he did with the Northern thing; he must have thought all that out from the beginning.’ But in fact no: he developed that view as he went along with everybody else, as they went along together, and the philosophy was created, or the thought patterns or the objectives were brought together [in that way].

Ahern was the most able politician of his era in the sense of winning power, and yet he had little or nothing by way of political conviction in the sense of having views that would differentiate him from others. Every politician in Leinster House is in favour of peace, jobs and economic growth and wants a society that has time for sports, volunteerism, a sense of community and neighbourliness. Ahern had enormous drive but no particular vision. Arguably what was a political asset for him was a catastrophe for the state in which he won power. Success for him came at a time when Ireland had at last achieved economic success and, precisely for that reason, needed new direction, new objectives, a particular type of management. Because he had no particular political vision he had nothing to guide his decisions. He was easily influenced by those who had strong views. And whenever there wasn’t anyone around to impress their vision on him he was inclined to let matters drift. Circumstances, chance, political calculation and the electorate swept him along until he, and then the country itself, crashed onto the rocks.

  PART FOUR

Economy

Chapter
11  

DESPAIR

I
n his acclaimed book
Ireland, 1912–1985
Prof. J. J. Lee reviewed the country’s performance when compared with other European states and probed possible reasons for its relative failure. It was published in 1989, the year of the general election that was to feature most heavily a decade later during the tribunals in Dublin Castle. It was written without a knowledge of the relatively huge amounts of money that were swirling round those at the head of Fianna Fáil at a time when emigration was high, population growth low, and optimism about Ireland’s future a scarce commodity. It was also written without the author knowing the extent of the tax evasion that existed in Ireland, with those in the cash economy hiding their money in bogus nonresident accounts in towns and cities throughout the land. A Dáil inquiry would later disclose the extent to which the main banks facilitated, promoted and engaged in this widespread criminality at a time when there was a genuine fear that the International Monetary Fund would have to move into Ireland. Likewise, Lee did not know that the Irish economy was about to begin a period of growth that would attract the attention of the entire world.

Nevertheless, from the viewpoint of post-Celtic Tiger Ireland, Lee’s observations and comments make for riveting reading and provide an excellent introduction to the nature of the Irish economy, and indeed to Ireland itself.

While it is difficult to talk about the performance of a country over time, it is possible to look at measurable phenomenon like economic and population growth. Lee illustrated that population growth during the period he reviewed was weak by European standards, despite starting from a relatively low density. Irish population growth was limited because of low marriage rates, late marriages and emigration; but this in turn did not mean higher-than-average growth in income per capita relative to other European countries. Lee showed that in fact Ireland—North and South—was not particularly impoverished, by European standards, in 1910. For national income per capita Germany scored 70.3, France 69.6 and Ireland 62. Ireland ranked higher than Norway, Sweden, Italy and Finland, with the last scoring 34.6. However, in the period to 1970 the rate of economic growth in Ireland was such that it ended up being well below the European average. In relation to national income, Lee showed, no country in Europe for which reliable data existed had as low a rate of economic growth as Ireland in the twentieth century. Poorer countries in Europe rapidly narrowed the gap between them and their richer counterparts in the wake of the Second World War, but not Ireland.

A boost did occur in both economic activity and population in the 1970s, at about the time Ahern was entering politics. International data show that the Republic had the highest growth rate of any country in the
OECD
in 1978. But Lee argued that this was bogus. The growth was achieved only by plunging the state into debt. Up to 1970 Ireland had been a creditor country. This changed during the 1970s. By 1975 foreign debt was equal to £4 per head of population. By 1985 this figure had soared to £2,269. This disaster occurred during Ahern’s early years in politics and in the formative years of many of those who would end up sharing the Government table with him.

The irresponsible splurge during the 1970s led to a slump in the 1980s, with both economic activity and population growth returning to more ‘normal’ Irish patterns. Loss of international competitiveness led to a devastating loss of jobs. The national finances got into a perilous state as those in the sheltered sectors and in state jobs fought to maintain their position. Interest payments on the foreign debt began to consume a growing proportion of the national income. The Government was forced to increase the amount of income it was taxing (though it would later emerge that those not in the
PAYE
system were hiding their income to an enormous extent). The main use of the funds borrowed abroad was to maintain and increase the wages of those in the sheltered sectors. As Lee puts it, the bulk of the borrowing was a covert conspiracy between politicians and the more advantageously placed groups at the expense of those in the vulnerable, exposed sectors. The politicians, in return, held on to power (and an income).

It was common when reviewing the dismal performance of independent Ireland to refer to the effects of the War of Independence, the Civil War and then the Economic War, but Lee rubbished such views. The damage inflicted on Ireland during the early 1920s was small compared with that inflicted on the countries of Continental Europe involved in the First World War. Serbia lost a quarter of its livestock. Poland lost two million cattle, one million horses and five million acres of forest. Its railway system was wrecked. Ireland suffered less from the great economic slump of 1929 than did most of its European neighbours. And then, of course, there was the Second World War. Lee took the example of Finland, which, with the same population as Ireland, lost 25,000 people in civil war in 1918 and nearly 100,000 people of a population of 3½ million in the Second World War. After the war it had to settle 400,000 Karelian refugees fleeing Stalin and had to pay substantial war reparations to his government. Yet, Lee pointed out, it recorded one of the most impressive post-war growth performances in Europe. He quoted Prof. John Kelleher from an essay of 1957, ‘Ireland, where does she stand?’

Any conversation on Ireland in Ireland is almost bound to produce some defensive mention of the terrible troubles the Irish have survived and the hard time of it the nation has had generally. Alas, the truth is that Ireland has had an almost fatally easy time of it, at least in this century.

For Lee, the solution to Ireland’s mediocre performance had to be found at the human level. Its economic history involved a struggle to foster enterprise. The Minister for Agriculture, Paddy Hogan, had sought to encourage enterprise in farming in the 1920s; Seán Lemass had sought to nurture domestic industry in the 1950s and had later turned in desperation to importing it. For Lee the reason for the lack of enterprise had to do with how a culture chooses to perceive opportunity. A blend of historical factors, economic and psychological, helped explain the primacy of what Lee called the ‘possessor over the performance’ principle. And for this reason he suggested that the changes Lemass had sought in the 1950s, when Ireland abandoned de Valera’s failed ‘sinn féin’ economic strategy, were an attempt to overturn the dominant ethos of the Irish state.

Lee suggested that the arbitrariness of the relationship between landlord and farmer, and between farmer and labourer, fortified a craving for security, which expressed itself most naturally in an attachment to land. Similarly, a strong cultural interest in fixity of occupational tenure emerged. Loss of land or job could see a family facing economic and social ruin. Risk-taking in such circumstances was considered highly foolish.

Lee also pointed to the weak relationship that existed between effort and reward during modern Irish history. The eldest son got the farm, and one daughter got a dowry. Performance did not dictate material success: no matter how hard a labourer worked he would not normally become a farmer. The two largest gains to farmers during the nineteenth century were from the Great Famine and the Land War: in the former the survivors could tack on vacated land to their holdings; in the latter it was political rather than economic effort that led to the windfall gain. Even in the basic work of farming, the raising and sale of livestock, the exchange rate with sterling and the haggling skill of the farmer at the fair had as much or more influence on the financial outcome than had the effort put into actual farming. In 1882 Michael Davitt’s attempt to introduce a land tax that would operate as a performance tax fell on barren ground. The Limerick Rural Survey (Tipperary, 1962) found, nearly a century later, that little had changed. ‘The prestige and social rank of the family as a whole depends on the ownership and not on the use of the property. Size of farm, not productivity, determines one’s place on the class ladder.’

Outside agriculture it was trade and the professions that dominated, not industry. Those involved in trade and the professions sought, like the farmers, to protect their positions more as a way of life than as an occupation. Possession took precedence over performance. Even in industry, family firms predominated, and the same ethos prevailed as in the farming family. Often the most able son was sent for a career in the professions, and the business was left to less talented siblings. The protectionism of the 1930s guaranteed markets to the new firms that emerged, meaning that there was little pressure on them to perform if they wished to retain their markets.