Every time I walk past a tiny house on Railway Road in Dalkey, it amazes me that my immigrant grandmother gave birth to six children there in the 1920s and 1930s. As is typical for many Irish people, our family history is one of upward social mobility in a generation or two.
My dad left school to go to work before doing the Leaving Cert; yet I got the opportunity to go to fourth-level education. This is social progress and a similar experience is shared by hundreds of thousands of us as free education, rising incomes and greater opportunities have allowed recent generations of Irish people to become more prosperous than their fathers or grandfathers ever expected.
When I look at my own children, I wonder if such upward social mobility is coming to a halt. Is the Irish middle-class about to disappear? This is a very real question. Will my children and their contemporaries be the first generation of Irish children in over 80 years to be poorer than their parents? And if so, should we do something about it?
This week there were massive protests in Israel which, to my mind, were of much more significance for middle-Ireland than the riots in London or the demonstrations in Syria. The Israeli middle-classes have had enough and are taking to the streets because they feel betrayed. Their grievances are easily recognised by the average Irish voter.
Most Western societies are based on trust; a trust which is anchored on the premise of social advancement. Politicians betray that trust at their peril. The idea that tomorrow will be better than today is extremely powerful and is the stuff that keeps societies reasonably peaceful. If there is a sense that we all have some stake and some chance, it allows us to go on.
This belief in tomorrow keeps parents pushing their children as best they can, looking out for them, making sure that they stay on the straight and narrow as much as possible. The notion of being reasonably well-behaved today because this “good” behaviour will be “rewarded” by even better economic opportunities tomorrow is the very fundament of social progress.
The rules are obeyed because there is a pay-off at the far side. This is the unwritten rule of our social contract with each other and with the State to which we are allied. We are citizens and in return for being good citizens, those we love will be protected by the State and our children will be given a chance.
One of the great unwritten stories of the boom, which is being forgotten now, is that it was a jobs boom. According to the EU, Ireland did not become more unequal in the boom, but more equal. The gini-coefficient — which measures the income of the poor as a ratio of the income of the rich — pointed to the fact that Ireland was actually more equal than the EU average.
But this has stopped, and worse, it has gone into reverse because the middle-class’s balance sheet is broken. On one side they have houses, which are falling in value, and on the other side they have debts, which are rising in cost.
As this “wealth” evaporates and turns into debt there is no way out. The only prospect for economic improvement is that income increases. But incomes are being squeezed by taxes and — in the areas where Ireland trades internationally — by intense competition, in particular from Asia. So tomorrow doesn’t look better than today, in fact, yesterday begins to look better than tomorrow and when that happens, politics buckles.
What happens when that social conveyor belt to prosperity and a better life stops? The middle-class begins to shrink. The gap between rich and poor increases so the middle-class gets squeezed to pay taxes for the poor, but at the same time they see their chance of social advancement scuppered by falling incomes, unemployment, negative equity and rising childcare and education costs.
The psychological costs of this are everywhere. How many Irish mothers today will be looking across the kitchen table at a despairing unemployed 22-year-old son or daughter, wondering how this happened?
And this is where an economic response is necessary. It’s not good enough to sit tight, hope that everything will pass and declare business as usual. The State has to react and change economic tack.
After all, when you boil economics down, it should be about making sure that demand in the economy is sufficiently strong to keep incomes reasonably secure and to keep unemployment as low as possible. It should be an instrument to give people hope and belief.
It should be about creating a system of trade where people can have a chance to fulfil their lives. If that system breaks it should be fixed. If a society divides whereby those at the top have too much and those at the bottom expect those in the middle to pay for them indefinitely, the middle will revolt.
Ultimately, if the middle decides that after all their good behaviour they have been led up nothing more than a social cul de sac, they will question the point of this system.
One million are expected to protest in Tel Aviv and other cities on behalf of the squeezed middle-class in Israel. These protests are fascinating because they are totally different from the mass protests in the other countries of the region. Israelis, unlike Syrians or Egyptians, live in a prosperous democracy with a well-functioning welfare state, like most Europeans. Their problems and their protests are much closer to Cork than Cairo.
In Israel, ordinary people with jobs are protesting that they simply can’t live on their wages. They are complaining about a country where the top is extremely rich and the middle, traditionally well-educated and secure, simply can’t live on their after-tax wages. Does this sound familiar?
Think about the prospects for the average family in Ireland for the next few years. We know that taxes will rise and rise to pay for a national debt. We know that demand has collapsed and that the banks are ceasing to function as providers of credit. We also know that the exchange rate is vastly overvalued — if you doubt this go shopping with sterling in Newry. We also know that interest rates are rising not falling and we know we have a Government that is intent on doing nothing radical to reverse what is a truly unprecedented challenge.
This combination of economic difficulties and political inaction means that the middle-classes will shrink in Ireland and that the conveyor belt which carried many thousands on this journey towards a better future comes to a grinding halt.
That’s when the problems really start.
We will have to send a lot of immigrants home, especially those on the dole.
I have no sympathy for people who lived beyond their means for example plumbers, electrians and builders spent wildly and took on too much debt who are now penniless. In fact the entire country lived beyond their means, this enconomy boomed because of credit inflows from overseas. Still today the country is spending 18 billion more than it takes in. By next summer we will have to put into our constitution a balanced budget amendment. Italy has already done this and the meeting between the French and Germans yesterday backs this up. Just imagine over the next short while we… Read more »
Irelands current Economic condition is dire, however we are but a small vessel in a big ocean and the advantage of that for us is that a percentile increase in exports/market share into and of different global industries can yield disproportionately higher employment than the same percentile gains of market share will do for larger countries, although the world economy is in turmoil the world economy has never been more accesible to business in Ireland. There are opportunities out there for Irish business and what would be a tiny increase in global market share would generate the employment needed to… Read more »
Good article David It is not new for children to be worse off than their parents as anyone growing up in any of the post industrial areas of Thatchers Britain will tell you. Thatcher as you know was a Friedmanite and admirer of the Pinochet Junta in Chile where in 1973 we saw the ‘social experiment’ that was carried out by Pinochet’s death squads to enforce Friedman’s evil vision of a free market utopia and it all failed miserably Today we are seeing the global results of Chicago School economic dogma and yet you sound surprised that there is inaction… Read more »
Ireland’s wages and homes can be made livable, and culturally and spiritually rich without a return to the cult of super shopping and boastful consumption.
Dodo Reincarnated and ~Unicorn to the masses
Well if the genetics of the above brings them both back again there must be some hope in some future time that the Family can be rebuilt .We just have to wait .
If the public sector waste and high wages was addressed,and the social welfare bill ruthlessly pruned there would be no problem. Instead,the still gainfully employed poor and the hospitalized sick,will bear the brunt of the pain and new taxation. There is we are told 86 billion Euros in personal savings waiting for the political pickpockets to purloin from our purses.? Who owns all this money? For God’s sake the incompetence of the Irish Civil Service is a legend,and their unions will guarantee no change. The IMF must drive a coach and four through their “Croke Park” codology-because no Irish government… Read more »
This current government with its unimaginative economic plans and non-existent may well finish off what is left of the Republic but I get no sense whatsoever of a common movement of people willing to camp out in the streets, especially not from the so called Middle Class, what would the neighbours think. Feel it ends there. If I was to put nail my colours to the mast, if it didn’t happen under Fianna Fail and in particular with Cowen as Taoiseach then it is unlikely to ever happen unless you get some major catalyst. I would still love to know… Read more »
A nice, self contained article David. Its an often mentioned view amongst many of my friends that the type of security and retirement that our parents had is something we will never experience, despite better education, better opportunities, better jobs, higher relative incomes. How exactly did this happen? I’m guessing there are many factors, but as usual I’d make the general points that: This isn;t just an Irish problem most of the giant problems like this that we face are related to population control, or a lack thereof, plus economic systems that rely on perpetual growth are silly. We are… Read more »
The ancient sea pounds on the shore
Twisting willows writhe against the clearing sky
http://www.zerohedge.com/news/chavez-pulls-venezuelas-gold-jp-morgan-great-scramble-physical-starting As Chavez Pulls Venezuela’s Gold From JP Morgan, Is The Great Scramble For Physical Starting? Venezuela has gold with, you guessed it, JP Morgan, Barclays, and Bank Of Nova Scotia. As most know, JPM is one of the 5 vault banks. The fun begins if Chavez demands physical delivery of more than 10.6 tons of physical because as today’s CME update of metal depository statistics, JPM only has 338,303 ounces of registered gold in storage. Or roughly 10.6 tons. A modest deposit of this size would cause some serious white hair at JPM as the bank scrambles to find… Read more »
@fellow posters
I went to an extremely interesting and thought provoking meeting last night as a result of “The Freedom Bus” parked near my office yesterday.
Attended by about thirty people it went on for over four hours;
See http://www.blankofireland.com/
– Don’t knee jerk… instead study very carefully, follow up and if you can; go to one of the meetings!
As I said……. hugely thought provoking
More at http://www.writeoffyourdebtsfree.com/
I would love to get an informed opinion from the posters on this site!
Apparently the media won’t touch it!
Apart from Max Keiser!
Again to quote the inimitable Kenneth Williams: “The answer lies in the soil”.
I think any new cultural revolution in Ireland will have to emphasize a concept and practice off capital accumulation (cash built up over generations). Here’s where I am coming from. My grandparents’ house in ireland was burned down three times by the Black and Tans (for good reason from their point of view, given the family’s insurrectionist activities) and built again each time as a sign of defiance and independence. Where did the money come from? Capital accumulation. From money literally buried in a few places on the farm because a bank account could be seized by the British government.… Read more »
David A very interesting article and also very interesting that you use Israel as a comparison You state that ” Israelis, unlike Syrians or Egyptians, live in a prosperous democracy with a well-functioning welfare state” That statement is correct but I think you missed out on a very important point 1. Israel is in the same boat as Ireland Ireland is being baled out by the IMF and the EU and depends on that money. It also has to repay that money & interest. Israel also depends on the money from the US in the form of grants but however… Read more »
What Happened to Obama?
http://www.nytimes.com/2011/08/07/opinion/sunday/what-happened-to-obamas-passion.html?_r=1&pagewanted=all
Yes the future looks very bleak indeed. But perhaps it will be much better than we think if we are lucky. We could be very fortunate and move from obsessive wealth creation to living in the present and creating a new future not hostaged to wealth generation alone. If over unity energy is ever delivered mankind will be freed from the shackles of fractional reserve banking as the means to transfer value and true free enterprise will reign. ‘Moleskin Joe’ a book by by Patrick MacGill depicts the life of an immigrant navvy at the time of the First World… Read more »
In the 1980’s there was a recession. Massive immigration – highly educated young irish men and women left to work in bars and building sites in the UK and america. Special visa schemes came into play in the US. Those people had less than their parents. Instead of whinging about it they got on with it – they didn’t sit back with their hand out they jumped up and put their back to the wheel. Most of them made a success of their lives – some came back and some didn’t. DMcW, your philosophy seems more and more focussed on… Read more »
Funny.. my son received his results yesterday. Did brilliantly thank god! Luckily, he is one insightful chap and was adamant during the year that there was no way he was signing up for a four year college course, to spend thousands on something with no guarantees at the end. Much to my protestations about having no chance unless he was prepared to get down and apply himself!! He carefully put together a portfolio for a course in music technology, radio production and journalism etc. Was accepted straight away and is looking forward to pursuing a career choice that he is… Read more »
David I notice that the comments below this article are much more interesting and humane that usual Maybe this is because you wrote about a more general topic rather than the mechanics of banks and the financial system. The ‘tiny techs’ who love discussing the finer details of the financial system are absent today and I for one am glad this is the case because frankly most of that nuts and bolts debate is meaningless to most ordinary citizens like myself They just want to switch off and rightly so. They are not stupid, they are just easily bored and… Read more »
Another great article. The one ominous sign for me is the excitement that i hear in politicians voices when the describe as a victory being able to return to the bond markets to borrow. This is the problem our aim should be to balance the books not create a bigger overdraft. If Michael Noonan had to go into AIB and present these figures he would be politely told to go ???????? As we all would be. Whats going to happen now is that Europe is going to force the balancing the budget issue and then we will feel the pain.… Read more »
The idea that this global/local recession/unemployment etc can be turned round and that we will return to an economic model that will employ the majority its citizens is a fallacy. “The Future of Work” by Charles Handy, first published 1984, charts the history of the ratio of Employment Vs Mechanisation/Automation/Digitisation and logically follows it through to 2050s where the author predicts it will reach its end point. Then the only ‘work’ requirig human input will be that which can not be replicated artifiically. This will require 10% of the population engaged in such activities on a part-time free-agents highly-skilled remuneration,… Read more »
Pauldiv talking about the UK under Thatcher got me thinking. This whole period reminds me of the UK in the 15 years prior to Thatcher: The great debt driven boom of the 1960s; the crisis of 1968 warded off by spending the state pension fund; 10 years of inflation, political unrest, destruction of the middle class leading to the 1970s, and finally the climax in 1976 when the ex-Communist UK Prime Minister James Callaghan announced to the Labour Party conference: “We used to think that you could spend your way out of a recession and increase employment by cutting taxes… Read more »
David asks: “Will my children and their contemporaries be the first generation of Irish children in over 80 years to be poorer than their parents?” First of all, every family is different. The black sheep may end up worse off in his generation, the whole of a younger generation may be impoverished by the reckless gambling of their parents, and so on. So your question is too simplistic for me. What does worry me is how the whole world will cope with the impending crunch. In the past, civilizations have come and gone for a variety of reasons, but now… Read more »
The premise of the article is correct. Those who toil are being steadily scelped, and patronized for their willingness to be scelped. The moral of the age – when you are being patronized, it is because somebody sees a way of getting something out of you. The banks did it. The media still does it. The politicians do it. And it should be a warning to you all. To be honest I could see this coming when Clinton was in the White House and Michael Lowry was awarding mobile phone licences. In fact most people sensed it. And that was… Read more »
{ What happens when that social conveyor belt to prosperity and a better life stops? The middle-class begins to shrink. The gap between rich and poor increases so the middle-class gets squeezed to pay taxes for the poor, but at the same time they see their chance of social advancement scuppered by falling incomes, unemployment, negative equity and rising childcare and education costs. } Bailing out the gombeens who to control the institutional state, and the ISEQ, makes sure that we are heading to dissaster. Those who can should plan their family’s future over a very long term. Intellectual freedom… Read more »
{ It should be about creating a system of trade where people can have a chance to fulfil their lives. If that system breaks it should be fixed. If a society divides whereby those at the top have too much and those at the bottom expect those in the middle to pay for them indefinitely, the middle will revolt.
}
In Ireland the system is always fixed…fixed by the insiders.
The Irish concept of Lifestyle is up for negotiation. In fact it has met financial reality, and the health affects of it’s misconceptions.
Who is Ireland’s Dick Cheney ?
Who is defending the rearguard for the Irish concept of lifestyle ? 800 km round trip pissups ? New reg cars in January ? Shopping in Manhattan before Christmas ?
I reckon it is Pravda-RTE.
Another aspect of children being worse off than their parents is a phenomenon called ‘grandfather rights’. It takes many forms, often amnesties. For example, if you are aged 60+, that generation who’ve had it handy and ridden the Celtic Tiger fairly well, known as the Jaggers in David’s books, well there’s every chance that they have a full driver’s licence without passing any kind of a test. Public Sector Unions (yes, those wonderful folks again) refused to allow more driving instructors to be hired in the 70s, which allowed more bad drivers on the roads, resulting in more fatalities and… Read more »
It could be argued that they were worse off in the actual boom as they had to juggle more and cope with higher stress levels than their parents.
As Tony Benn was moved to tears by, ..’let our revenge be the laughter of our children’.
http://women.timesonline.co.uk/tol/life_and_style/women/celebrity/article4534693.ece
Latest tweet from Paul Sommerville. (No wonder he is not let of the state broadcaster). [ App EU called P Neary to ask how short selling ban works,following his plan to a tee.Soc Gen —10 %,Cred Ag —8%,Comical if wasn’t so serious. ] Now, I am absolutely astounded at the stupidity of the Brussels and/or the ECB. Patrick Neary is the last person you ask for advice concerning banks, bank meltdowns, and the management of a currency regime. From the clowns who brought you the Treaties of Maastricht, Nice, Lisbon and the Lisbon “cast-iron guarantees”. They will prevent the banks… Read more »
So, seems to be a collision course developing between Troika and ILP. Merkel and Sarkozy want greater political cooperation = control of our economy; and our dullards policy of greater austerity towards greater economic sovereignty. IBEC during the week did a solo run on our economy bursting ahead with growth outstripping any other EU state. This culminated in a Primetime appearance of an IBEC gombeen playing his growth violin against the spectre on the news of falling world markets and the imminent collapse of exposed parts of the european banking sector. The euro is gone collapsed by exposure to its… Read more »
PRAVDA-RTE Primetime…sorry about the persistent rain in the post above, but what can you do:)
@ Colin & Deco
Re: the Soviet Union and socialism
Deco wrote:
“And one of them S letters stood for Socialist. No denying that.”
Prior to the fall of the Berlin Wall East Germany was officially known as the ‘German Democratic Republic’. Would you argue on that basis that East Germany was democratic…hardly.
Similarly the use of the word ‘socialist’ in the name of the Russian regime was a misnomer.
What it says on the tin is not always what’s in the tin.
Gege Le Beau wrote: “If we want a world where profit is put ahead of people, ahead of the environment, ahead of society, ahead of people’s health and right to educate themselves then we won’t have long to go as a species.” Absolutely. What we need is return to human values…not market values. Most of us live and work in the ordinary physical economy; and it is in our natural interests that supply and price are stable; we value stability. But the financial markets which gamble on the prices of the commodities we rely on for life and livelihood do… Read more »
Step aside here folk’s and make way for the latest gobshite with a vested interest……yes I am sure you have guessed already ….It’s our very own Comical Danny…….
http://www.independent.ie/national-news/no-double-dip-wersquore-on-road-to-recovery-ndash-boss-of-bosses-2851164.html
http://www.herald.ie/news/euro6bn-bailout-will-solve-our-homes-crisis-says-kelly-2853064.html A good suggestion there from Morgan Kelly to bring relief to homeowners on the end of a mortgage facing 50% plus negative equity, rising interest rates, charges, taxes, loss of earnings, maybe unemployment in the great go slow our economy is experiencing. Morgan was attacked last week by Ronald Quinlan Sunday Indo Aug 14 on his figures. Quinlan: “…2005 and 2006…In those two years, a total of 7,435 properties with values of €635,000 were sold. And while that number is also substantial, it does not tally with Prof Kelly’s estimate of 10,000 mortgages on properties valued between €1m and… Read more »
Latest trick by Goldman Sachs to continue ruling the world:
A Goldman Sachs executive changed his name so he could take a job with Rep. Issa (R-CA) in order to gut any financial reform legislation using the Congressman’s committee as the vehicle. But it’s still not clear what pay-off/bribe the Congressman got.
Fascinating article here: dark pools, gun slingers, day traders, owning the house and the ending of the uptick rule http://moneymorning.com/2011/08/19/new-abnormal-permanently-engineered-market-volatility/ “But the biggest advantage these venues have is that they “see” what orders are coming into them. And, regardless of whether or not it’s legal, they trade against them and take advantage of knowing the specifics of other pending orders that can be used to backstop losses. I’ll get to that is a moment.” “The New Abnormal Wall Street finally got what it wanted on July 6, 2007, when the Securities and Exchange Commission (SEC) did away with the “uptick… Read more »
re: fair wages and market forces Setting general parameters and minimal social standards through a variety of mechanisms such as employment legislation and social protection etc are surely necessary in a civilised society and need not interfere with the operation of markets. Surely also markets ought to serve society and civilisation…not the other way round. We are on the eve of the possible collapse of the global financial system and economy. If this happens there will be not merely be a loss of savings and assets but a loss of lives on a catastrophic level. This situation was not brought… Read more »
I consistently like Paul Mason’s work for Newsnight –
http://www.bbc.co.uk/news/business-14579710
Regulated Out of Existence Our children are regulated out of existence by the Government .What did children do in the 50,s and 60,s ? In those times there was very little money and there were No Regulations to talk about that hindered their choice to do any kind of work.So on a typical old housing estate as it was then some started doing the following : Join the local milkman doing the daily mild rounds and get a few pence ; and Collect old pallets and resell them to a warehouse; and Collect waste paper and sell it to a… Read more »
Commodity Control In Ireland one of the largest and earliest commodities produced was Flour .It was commenced and developed by The Quakers and their flour factories flourished mainly in Munster and Leinster and Belfast .Thes great people had simple religious beliefs and their bonds and trusts formed the basic for great things that did follow subsequently.Many of the family names were : Shackletons of Carlow & Dublin Spicers of Navan Odlums of Naas Budds of Craigue Browns of Waterford Davis of Enniscorthy Bannatynes of Limerick Reeves of Newbridge Andrews of Belfast Alexander of Belfast Going of Cahir Webbs of Mallow… Read more »
The ‘I am ‘ Mantra Today society seems to only care for their own personal self indulgence and how much they can get .There is no longer any agreed common belief order of authority to follow between the people that matter ie Irish Men and Women .All that has been distroyed in the recent process of events in our lives and what has been perceived to have been amassed in self indulgence and personal self worth has no longer any currency to follow as it is now socially and economically debased .Thus the coin ‘I am ‘ is a Big… Read more »
I find it very remarkable that a few Communist/Socialist posters are spreading their propaganda and liberal elite nonsense on the website of a Capitalist and Free Market Economist.
Oooh..I read that yesterday Moody’s wrote to the branches of Germany’s Sparkasse bank indicating that they wished to amend the basis of their credit rating, the requirement is for direct contracts between the rating agency with the public agencies ‘behind’ the Sparkassen…..using strong-arm tactics re continued allocation of triple AAA to obtain new contracts….hmmm
David have you read Mihcael Moore’s letter to his fellow compatriots? Have you seen his documentary last week “American Capitalism a Love Story”? . He talks about a simple principle: the “Common Good”, and how people at the top has to lead by example. And although he doesn’t talk about it, during Roosevelt’s presidency in the USA and almost up to the mid sixties, the difference between the average industrial salary, and the top CEO of Banks and Corporations, and Universities Graduates, was only about five times. You go and check it for yourself, and correct me if I’m wrong.… Read more »
http://www.larouchepac.com/
Hope this might help someone have a better day Human consciousness is evolving quickly thanks to an unlimited amount of information and the realisation that the concepts of authority and societal rules have proven to be a facade which long shielded us from the immoral, criminal and incompetent minds of politicians, bankers, professionals and academics. The elites are exposed for what they are and everyone can see that they are wearing no clothes People know that they have been fooled collectively and those who are conscious and on a quest for personal enlightenment are examining their own part in the… Read more »