OUR DEMOCRACY IS FACING NEW CHALLENGES

Pat Rabbitte, columnist, Sunday Business Post, former leader, Labour Party, former Minister                                  

 

We are invited in this session to address whether the new populism is due to a breakdown in democracy, or to growing inequality. I am not persuaded that we can easily conclude that there is a single cause or event for the scale of the populist uprising that we see on our television screens and at the ballot box. But if there is one event that more than any other is driving the acceleration in populist demagoguery, it is undoubtedly the impact on ordinary people of the near-global financial crash of 2008.

 

NONE OF OUR DEMOCRATIC SYSTEMS ARE PERFECT
Democracy is an imperfect system. If, at its core, democracy is a system where, without impediment, people choose their own government, there is no country where it can be shown to be a perfect system. The remark attributed to Churchill that “democracy is the worst form of government, except for all the others” seems apposite. The old bulldog, for all his heroic qualities, had his own elitist take on democracy as when he remarked that “the best argument against democracy is a 5-minute conversation with the average voter.” In the age of deference he got away with it, but in fact the people have a right to be wrong.

Nobody can argue that our electoral system is other than impeccably democratic. It more truly reflects democratic opinion than the first past the post system in the neighbouring island which effectively excludes small parties and independents. Other democracies have a threshold for election to parliament that has a similar effect. Some countries operate a list system that allows a route to cabinet for people whose talents may not include harvesting votes. The USA would take offence at any suggestion that its general election system is less democratic than, say, member states of the EU. But it is true that the democratic system in the USA is skewed by the power and influence of money. But none of our systems are perfect. One can imagine what Churchill would have said about a government whose legislative programme is dictated by independents. [In fact, you should hear what I say about it.]

 

THE FINANCIAL CRASH ROCKED OUR DEMOCRACY
Of course, an impeccably democratic electoral system is no guarantee of itself of good government. The effectiveness of our civil service, the quality and independence of our judiciary and the responsiveness and agility of our other institutions also matter. There is no doubt that the financial crash rocked our democracy and undermined public confidence in our institutions. The total collapse of our banks was only avoided at terrible cost. Our most hallowed institutions failed to anticipate the crash or limit the damage. The Central Bank was woefully negligent, the Financial Regulator was incompetent and the Department of Finance acquiesced in the excesses of the political leadership of the day. The government crumbled as the people looked on in horror.

The unemployment figures threatened to rise to a half million. People lost their homes, and some lost most of their pensions. Forced emigration returned with a vengeance. We found ourselves in an existential crisis.

We are in two minds now about the disaster that befell us. It doesn’t suit today’s narrative to recall how serious the crisis was, because to do so would necessarily involve some acknowledgement that our recovery — albeit uneven — has been better than anyone forecast. The narrative of the day is that most politicians are venal, self-serving, potentially corrupt and perversely dedicated to making things worse. At the same time, this narrative encourages focus on the casualties of what happened, but without context.

The insinuation persists that there was another way that somehow would not have involved such hardship or casualties. We have not been told what the other way might have looked like but it hangs in the ether like a bad smell. We could, of course, have defaulted but how many people really believe that default would have been a less damaging or less painful resolution?

Some of the emotion may have abated, but the debate will endure into the future. Given the depth of the financial crisis, it is perhaps surprising that more harm was not done to our democracy. Damage was certainly done, but I don’t think that we can conclude that there has been a breakdown in our democracy. The trust that is pivotal between citizen and state has been damaged, and confidence and public trust in our institutions negatively affected. The taxpayer has since paid millions to rebuild the Central Bank and restore confidence in the regulatory system. The Civil Service has striven to learn the lessons of the crash. Reforms at national and EU level have been put in place. Unfortunately it has not been so easy to restore confidence in our politics and in our political institutions. Nonetheless, we can’t conclude that democracy has broken down but the structure of our politics has been seriously fragmented.

 

CONVENTIONAL POLITICS IS SEEN AS INADEQUATE
Globalisation and technology have lifted millions of people out of abject poverty, but have also contributed to greater inequality and income disparity. Economists are broadly agreed that the global financial crisis of 2007—2008 was the most serious crisis in capitalism since the crash of 1929. However, what is different is that on this occasion the crisis did not lead to a depression as devastating as the Great Depression that followed the 1929 crash. Principally, this is because on this occasion, governments and Central Banks acted to avoid the total collapse of the financial system. Nonetheless, the legacy of the crash lingers and some people suffered real hardship.

Modern societies must have entrepreneurs, innovation and invention. However, whereas technological progress has always created new jobs, it has also left jobs obsolescent in its wake. This has happened at the same time as the income gap between those at the top and the bottom has widened. This growing disparity in incomes and the concentration of unemployed redundant workers in former industrialised communities have bred serious discontent and alienation. Low incomes and stagnant wages and zero hour contracts have fuelled the discontent and the feeling of being left behind. Conventional politics is seen as having failed to adequately come up with solutions. The financial crash has worsened the sense of alienation.

Left of centre parties, Labour and social democratic parties have been the main focus of public anger. In Ireland most people no longer distinguish between who caused the crash and who came to the rescue. New populist forces posing as anti-establishment have emerged to exploit this new environment. One definition of populism is the willingness to exploit the perception that conventional politics has failed without offering any credible alternative.

 

A NEW EUROPE EMERGED FROM THE SECOND WORLD WAR
The feeling is that mainstream European social democracy has run out of steam and no longer offers relevant solutions to match people’s expectations. In the second half of the twentieth century social democracy was a major force in the transformation of European societies and in improving people’s living standards. The war to end all wars in 1918 fundamentally altered the political, social and economic landscape. But its settlement also laid the foundations for the conflagration that was to come in 1939. The devastation of the Second World War plumbed new depths.

Historian Ian Kersaw in his seminal work “To Hell And Back” summarises as follows:

       “The moral consequences of such a profound collapse of civilisation

         would be felt for the rest of the century and beyond. Yet, remarkably,

         the Second World War, in stark contrast to the mayhem engendered by

         the First, paved the way for Europe’s rebirth in the latter half of the

       century.”

The war finally put an end to competing European powers struggling for mastery of the continent and, within a short time, the foundations were laid for an astonishing recovery and the emergence of a new Europe.

Although the horrors of war continued in some countries for some years after 1945 in terms of reprisals and pogroms, new forms of pluralist politics were remarkably quick to reassert themselves. Nowhere was the transformative effect of social democracy more evident than in the neighbouring island where the new Labour government established the welfare state, delivered a huge house building programme, significantly improved workers’ rights, improved access to second-level education and took coal-mining, the railways, gas and electricity into state ownership and nationalised the Bank of England. The establishment of the National Health Service was considered its greatest achievement. The rebuilding of Britain also provided badly needed employment for Irish building workers.

In other European countries conflict within the left allowed the emergence of Christian democracy as the sometimes dominant force. Either way the political landscape was changed utterly and the founding of the Common Market, itself a peace project, gradually developed into the European Union (EU) that we know today. The social democratic agenda was greatly expanded. Women’s rights and the rights of workers were enhanced, access to education greatly expanded and major strides towards improved equality.

The progressive decades of EU leadership were gradually overtaken by globalisation and the new neo-liberal economic orthodoxy. Disillusionment at the unfairness of the new orthodoxy was evident before the collapse of 2008 but has been ramped up during the austerity years that followed.

 

GROWING DISPARITY AND INEQUALITY
It is interesting that in his book “Capital in the Twenty-first Century” the French economist Thomas Picketty traces what he calls “the explosion” in inequality in France and the United States as happening after 1980. He says that, for example, in France “a stunning new phenomenon” emerged in the 1990s. He is referring to top salaries, “especially the pay packages awarded to the top executives of the largest companies and financial firms” which reached astonishing heights. Picketty notes that in the United States since 1980 “income inequality has exploded” and again he furnishes the data to support this contention. The increase in very high incomes and very high salaries, he says, “primarily reflects the advent of super-managers” who have contrived to obtain “extremely high, historically unprecedented compensation packages for their labour”. Picketty finds that “managers of banks and other financial institutions and traders operating in the financial markets are about twice as common in the very high income groups as in the economy overall”.

What a pity that Picketty didn’t come to Ireland to see how well we pay the same gentlemen and how well they repaid us. Picketty believes that “the most widely accepted theory” as to why wage inequality is greater in some societies than others i.e. a race between education and technology is only part of the explanation . Suffice it to say that he demonstrates that, for example, in his own country the wage hierarchy was fairly stable over a long period. And when the average wage increased enormously over the decades, “the gap between the best and the worst paid deciles remained the same”. But now all is changed.

The Social Mobility Commission in Britain published its “State of the Nation 2016” report a few weeks ago. The report also highlights the growing disparity in incomes and records that “millions of hard-working families have experienced a 5% real-terms average fall in wages since 2008 and that young workers have seen a 15% decline in hourly pay”. Only one in ten low-paid workers – mainly women – escape low pay.

In the Scandinavian countries, where wage inequality is more moderate, it appears that this is partly a result of a more egalitarian and inclusive system of education. Picketty’s conclusion will ring a bell in Ireland when he concludes that “the question of how to pay for education, and in particular how to pay for higher education, is everywhere one of the key questions of the twenty-first century”. But he too concludes that “the best way to increase wages and reduce wage inequalities in the long run is to invest in education and skills”.

 

THE NEW POPULISM
If there is validity in the claim that conventional politics has mostly failed to address the growing inequality, it beggars belief that the new populism contains the answer. We still don’t know what Brexit means but most economists are agreed that – if it happens – it will make British workers, and by extension Irish workers, poorer. It is difficult to believe that citizens disillusioned with the establishment have latched on to Donald Trump, Boris Johnson and Shane Ross to lead the revolt. More quintessentially establishment figures it would be difficult to find. However, these gentlemen have identified a gap in the market and have demonstrated a talent for telling people what they want to hear.

Allowing for the shortcomings of conventional politics, the question must be asked whether the new populism is a fashion that we must endure for a period. What happens when the expectations raised are cruelly disappointed? If the rust belt states are going to return to work, it won’t be the same people returning to their old jobs. And Brexit or no Brexit, there will be no return of the old smokestack industries. Nor will a functioning Garda station at Stepaside usher in reform in An Garda Siochána. The Trump experiment is horribly unravelling before our eyes even if, for the moment, he retains the allegiance of his core support. If, for example, he is successful in removing a measure of health protection from twenty three million Americans will he retain that support? Brexit uncertainty is beginning to damage investment decisions in the British economy. Adulation and the roar of the crowd will only sustain big egos until the performance falls short of the promise.

 

UGLY RIGHT-WING POLITICS AND THE NIHILIST LEFT
There is a more ugly kind of right wing politics elsewhere in Europe that is not just populist but threatening and which also has received a boost from the discontent that has followed on from the crash. We have been spared that dimension of ugly racist or neo-Nazi politics. However, the financial collapse has given us a new brand – new to Ireland – of nihilist left politics that is about permanent protest and is destructive of progressive politics. Fooling people that they can get services without having to pay for them will only help undermine the fabric of true democracy.

In conclusion, our democracy is older than the State. Its roots can be traced back to O’Connell through Parnell and Davitt and up to Redmond. Since Independence, as the late Brian Lenihan told MacGill in 2004, “governments of different political colouration withstood the challenge of militarism in the twenties, fascist agitation in the thirties and civil strife in northern Ireland in the seventies”. So I don’t conclude that our democracy has broken down, but, in circumstances where the two civil war parties have set their faces against coalition and where the remainder of the political pie-chart is so hopelessly fragmented, it is certainly facing a new challenge.

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