An Irish wedding: The case for growth

Someone else's wedding

Someone else's wedding

Two weeks ago I returned home to Ireland for the wedding of my cousin Stephen. I’m inclined to turn down more wedding invitations than accept, but this was family. And as with Irish family weddings it was large, loud, late and full of, well, family.  The O’Donovan family tree numbers 19 branches at grandchildren level and all but one were in town to welcome Stephen’s bride to our midst. But the gathering, like all the best in life, was a fleeting affair. As  hangovers receded the morning after, we checked out of the hotel and went our  ways,  journeying back to Canada, Spain, Scotland, London, Brighton and beyond. Sometime later this year 11 of 19 will be living abroad. Some won’t ever return to live. Some simply can’t. This is Ireland, 2012.

Two weeks from now Ireland votes on the  European Fiscal Compact. And what  started as a referendum pitched locally as a debate about whether Ireland should repay  boom time lending arrears to German banks, now carries with it political ramifications that stretch across the continent and will last a generation. The Fiscal Compact is not simply about unserviced debts on loans that should never have been made. It’s about our approach to society, jobs and decent living standards for all, and ultimately the relationship we have with our governement, both local and European.

But what’s most striking in this moment, is the incredible opportunity in front of  all of us  right now. If the eurozone is serious about growth, it can have it. That was the headline of my SPRU collegue Mariana Mazzucato’s comment piece in today’s Guardian. Growth, and thus increased prosperity for all of Europe, comes not from “structural reforms”, or cuts, but from investment:

“Companies invest to make profits and grow. Evidence shows those which invest more in new technology, human capital and research and development, and are located in countries where public spending in these areas is high, are able to produce more competitive and better value products.

“Italy has not grown for the last 10 years, mainly because its public and private sector did not make key investments in factors that increase productivity. Its debt-to-GDP ratio rose because its growth rate was so much lower than the interest it paid on its debt. And Greece grew in the 90s not because it was making smart investments but because badly directed European structural funds allowed it to get away with not making them. Once those funds expired, so did the false growth.

All the cuts in the world aren’t going to bring Italy or Greece back to growth they never really had. And if Greece presses the nuclear button and exits the Eurozone entirely, as Martin Wolf puts it in today’s FT, ”the belief that countries can starve themselves back to health, in the absence of economic expansion and probably higher inflation in the core, would have to be abandoned.”

A week ago I was put in touch with a small group of people in Ireland who had had enough of this austerity dogma. Having seen the tide starting to turn following the elections in Greece and France, Ireland is in danger of committing to a treaty which was the wrong medicine for the wrong patient. As Europe starts to turn, slowly, to growth, Ireland is in danger of locking the out of date policies of radical austerity into its constitution.

And yet, other than the extreme left and even extremer right, the political establishment in Ireland follows meekly this single austerity line. The media despite some exceptions is not far behind. Yet more than one third of voter haven’t committed to either side yet. Over 40% of Labour’s supporters are planning to break their party’s line. Clearly, despite coherent leadership, the Irish people are sensing that the time for austerity is gone.

So over the past week, I’ve done what I can to help get this growth message out, building a website at forabettereurope.org (with some very talented friends) and on it  a voter declaration, where people all over Ireland can give each other the encouragement to stand up against a prevailing orthodoxy and make a responsible decision on May 31st.  Our message is simple, let’s not miss this opportunity. A ‘no’ vote puts Ireland at the centre of the movement for a better Europe.

So if you’re of voting age and Irish, I urge you to sign, and pass the message on the friends and family. If you haven’t been graced with such good fortune as to have a harp on your passport, leave a message of support on the site and on our Facebook page. For the next two weeks the people of Ireland have the opportunity to play the lead in the call for new growth policies in Europe. Together, let’s make sure we get as many as possible out of the wings and onto the stage. And here’s hoping that next time the O’Donovan cousins meet up for a wedding, we don’t all have to travel quite so far.

2 thoughts on “An Irish wedding: The case for growth

  1. The Fiscal Stability Treaty is primarily about ” strengthening the rules designed to make governments keep a balance between their income and their spending “. In other words simple good practice for individuals , governments and businesses. No more and no less.

    If the spendthrift sections within the EU had curbed their greed and lived within their means the necessity for such a treaty would not have arisen.

    As an irishman living in a society which continually demonstrates its innate desire to ‘beat the system’ and avoid to having to observe rules and regulations I for one support the need for such disciplines as contained in this treaty.

    I also fully support the urgent need for a comprehensive growth strategy but that is a parallel debate.

  2. Nice piece.

    However I disagree with the central tenant of your argument: as I understand it the Treaty is not about austerity / no austerity. Austerity, i.e. reduced public spending, is on the cards irrespective of the outcome of the vote. Ireland’s structural deficit is around 6%. Currently that funding gap is being met through funding provided from the ECB / IMF, and that funding comes with conditions related to Ireland reducing this deficit. This requires that the Government spends less / taxes more. If Ireland does not like the conditions that come with this funding, the international bond markets are an option. However due to the perceived risk attached to lending money to Ireland, the interest rates from bond markets are unaffordable.

    I find it impossible to understand what the alternative to austerity is when outgoings are larger than incomings, and no-one will fund the difference.

    So, there are two questions:
    1. Where does the money for investment in pro-growth areas come from? This question is relevant for Ireland and other Member States that are facing public sector spending cuts.
    2. What does the Treaty have to do with austerity?

    Answers on a post card please.

    E

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