Much of the talk in the past 24 hours has been about the inconclusive mess that the election has thrown up. There is no clear winner and any number of obvious losers. Commentators have suggested that political compromises and coalitions will lead to economic instability.
I want to refute the notion that there is something inherently economically unstable about inconclusive election results. In fact, the opposite is the case.
The more political compromises, deals and negotiations a political party has to make, either with real enemies or imagined ones, the more solid it becomes and the less brittle the entire political system is.
In his excellent book ‘Anti-fragile’, the philosopher Nassim Taleb makes this point about the difference between fragile political entities and robust ones, by comparing post-war Italy with Syria. The fact that he made these points before the Syrian war, not after it, makes them all the more prescient.
Italian politics, with its interminable coalitions, has been for years portrayed as unstable, weak, dissenting and fractious. In contrast, Syria, with its one-party dictatorship, bolstered by a massive military that didn’t tolerate any dissent, was portrayed as a bastion of stability in the region. In Italy during the 1990s and early 2000s when small nationalist regional parties emerged demanding that regions secede from Rome, many commentators saw this as the beginning of the end for the Italian state as the squabbles were voiced very publicly in the media and people were forced to take sides. But what happened in the end?
The system compromised, back-room deals were done, someone got a little and others got a bit more, but ultimately the country survived and life went on.
The Italian system, for all its weaknesses, has a core strength – that strength is the ability to compromise, to do deals and to pull back from the brink.
It is essentially a very adult, grown-up country with a very adult political system.
Contrast that with Syria. From the outside, its monolithic, strongman regime was seen as robust but in fact it was very fragile. Without a tradition of doing deals and compromising, the system was unable to deal with negotiations and a small threat to the power ended up destroying the entire country. The same inability to compromise can be seen in all the undemocratic, inflexible Arab countries which saw regimes toppled during the Arab Spring.
These Arab systems that were not used to compromising simply broke apart when faced with big decisions. They were in fact childish, rather than adult.
Italy, on the other hand, with its endless coalitions, is able to deal with its problems in an adult fashion. It makes the necessary compromises to keep the whole show on the road. Italy is an adult country and its political system with all its deals and negotiations is in fact very robust.
This brings me back home to the fall-out from the elections. A ‘grand coalition’ might not necessarily be a bad thing for the country at all, and indeed any coalition of all the colours of the rainbow if anchored by one of the big two, might work too.
The more compromises a system makes, particularly if that is what the people voted for, the better.
The obvious choice is a coalition of the big two parties. This is what the majority voted for, so why not?
The clear template here is Germany. It seems to have evaded much of the commentariat that although Germany is ruled by Angel Merkel, her government is a grand coalition of the centre right Christian Democrats (CDU, Merkel’s party) and the centre left Social Democrats (SPD), and the much smaller, Bavarian-based Christian Social Union (CSU).
Think about it. The two parties that have dominated German politics since World War II, sworn enemies, divided by apparent unbridgeable ideologies, are in bed together. The government is stable and the country works very well. Compromise again. Adult behaviour.
Indeed, a Fine Gael/Fianna Fáil coalition might look very much like the present German one without the smaller party.
The CDU controls five ministries in addition to the positions of Chancellor and Chancellery Chief of Staff/Minister for Special Affairs. The SPD controls six ministries and the CSU three.
The six most powerful ministries were divided equally between the CDU and the SPD: the CDU controls the ministries for finance, internal affairs and defence, while the SPD controls the ministries for foreign affairs, economics and energy, and justice and consumer protection.
Inconclusive election results are now the norm in many countries.
Consider the cul de sac the majority Conservative Party in the UK have waltzed themselves up with Brexit?
This is essentially a scrap for the heart and soul of the Conservative Party, which has been allowed to get out of control and presages a once-in-a-generation constitutional crisis in the UK.
Would a coalition with various different parties have ended up with such an all-or-nothing option?
Therefore, rather than agonise about stability based on the false notion that only clear majorities deliver stability, we should look at other examples where grand bargains are struck to the benefit of the majority of the voters.
The majority of Irish people voted for two parties that occupy the middle ground. That is the government that we should get, warts and all.
As well as hoping the politicians will be mature and do what has to be done, people who voted Fine Gael and Fianna Fáil have to be equally grown up and realise that the “war is over”. It is time for the great compromise.
The funny thing about compromising whether in politics, business or just in life, is that once you compromise, you typically realise that your supposed core values weren’t so core after all.
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This is going to be an EPIC! thread….*popcorn* Was there ever a more appropriate song to kick off the party? “Tweedledee and Tweedledum” by Middle Of The Road. “Do you recall Some years ago? Up in the mountains that were white with snow Inside a cavern Mcdougal he was plannin’ There’s gonna be a showdown with somebody he knows. Well he’s been there A year or so Something will happen very soon I know I hear him playin’ his bagpipes every mornin’ I think that it’s a warmin’ He’s gathering the clan. Soon you’ll hear the sound of people shouting… Read more »
One very strong reason why it so difficult for FG and FF to forge a coalition is because if those two formed a government, the Irish people might wake up and see that there is no fundamental difference between them, that there is not real left and real right in Ireland, that it is all based on personalities and that the whole political system needs to be build from scratch, like Ms Lucinda Creighton and Mr Stephen Donnelly have been trying (btw, if I understand correctly, all accusations against Ms Creighton appear to have been a smear campaign – so… Read more »
Germany a good example of a successful government? :-o
Google “Merkel must go protest”
“This is essentially a scrap for the heart and soul of the Conservative Party, which has been allowed to get out of control and presages a once-in-a-generation constitutional crisis in the UK.” To be clear, Cameron thought he’d more or less boxed that part of his part away. The reason there is a referendum on Europe is that Cameron thought he’d have to go into coalition again, and use the excuse of the Lib/Dems inevitable block on having one, as reason not to. But the reason he offered one in the first place is for one alone: UKIP. The Conservatives… Read more »
Surely a government (democracy) works by a majority consensus on individual items of legislation. A bit like a marriage, where being defeated on a motion does not necessarily entail being kicked out. Party A proposes legislation to let’s say abolish Irish Water,then all TDs vote on it according to conscience (assuming they have one!).If proposed legislation is approved the appropriate departments enact it, and if not the topic continues on as it was before. The guys proposing the legislation go back to the drawing board, and aren’t allowed broach the subject again for maybe a year,and the Dáil resumes its… Read more »
Right now, without prior consensus, a coalition between these old enemies is unlikely to happen, I think. For FG and FF supporters such an arrangement would be a shotgun wedding as opposed to a marriage by choice, or even of convenience. It is a matter of identity that extends into the mists of time and reflects the basic tribalism inherent in the Irish mentality. Spain is the most relevant recent example of an inconclusive election among our neighbours, and I am surprised the author didn´t reference it in his piece. The election there was held over two months ago and… Read more »
The final paragraph is very good – classic McWilliams.
The good news is there’s no hurry. All parties need to take some time to reflect on the electorate’s verdict. We all remember the failures of 81/82. Having been based in Switzerland since the late 90s, you get a respect for the fact that ALL Swiss governments are a coalition of 3-4 parties with no party having more than 2 of the 7 top cabinet seats in any 5 year period. And Switzerland although half the geographic size of Ireland has twice the population. And, to David’s point, no-one regards Switzerland as unstable, right? So my recommendation to the non-SF… Read more »
It is interesting listening to the media discourse after this election. The commentary is about things like an “inconclusive” election, “what the people voted for”, one interpretation of which is expressed here as a “grand coalition”. But to borrow one of David’s favorite sayings: “Think about it”! What do any of these phrases mean? Let’s start with “inconclusive election”. What is inconclusive about it? We have 158 parliamentary representatives, exactly as the law calls for. That is not inconclusive, unless of course you were expecting something the law does not call for i.e. some pre-agreed agenda, a secret consensus, which… Read more »
part=party
Ireland: Fitch says Irish election raises uncertainty: In a statement, Fitch Ratings maintained its Irish rating at ‘A’/Stable. It said that while inconclusive general election does not alter its expectation that the next government will pursue further deficit reduction, protracted political uncertainty, an unstable government, or reliance on more radical political elements could be negative if they reduced the authorities’ ability to respond to downside fiscal or economic risks. Fianna Fail calls for reform in first post-election move: The Irish Times cited remarks by Fianna Fail leader Micheal Martin who called for major political reform to be agreed before the… Read more »
Save yourself from the politics of nations.
http://investmentresearchdynamics.com/silver-eagle-sales-set-a-february-record/
David, A good article except that I disagree with your comment that the “The majority of Irish people voted for two parties that occupy the middle ground” IMHO The Majority of Irish people voted to expel the FG/Lab government as can be seen by their decimation. FG’s retention of seats is only due to the natural human resistance to change plus Enda’s dictatorship style grip on power. I feel that what the Irish people voted for is a Rainbow government anchored by FF, it is unfortunate that FG held onto so many seats which makes that arrangement unlikely as nobody… Read more »
The Irish electorate voted for anarchy.
Because nobody in the new Dail is going to vote for anything that reflects negatively on their electoral chances.
They just had a clear demo of the consequences of doing so.
The biggest losers surprisingly are SF.
The huge number of alternative leftie choices squeezed them badly.
FF were the big winners.
Compromise in this instance could be costly.
It all depends on the types of compo made always bearing in mind that the compo must be good.
FREE MEALs for everyone in the audience.
FF’s Dara Calleary, just now on the One O’clock News, defused RTE’s attempt to induce a major national strike of water payments by misrepresenting Simon Coveney’s comments on RTE’s Primetime last night. RTE is a bigger barrier to rational debate than are the political parties. If we are to get through this and achieve Dail reform we must allow our politicians to talk to each other. Dara Calleary and Simon Coveney seem willing to have a rational discussion about water charges. They cannot do it if RTE interviewers arrogantly try to shout them into providing RTE with a sensational headline… Read more »
A major mandate for the 31 st Dail was to deal fairly with the very high debt ratio mortgage crisis.
E Kavanagh is right about Gilmores hopeless contribution to helping voters with grossly overvalued 2003 to 2010 mortgage debt that needed to be restructured to real debt value ratios via full term interest only restructures and industry best practice restructures. Pat Rabbitte boasting that false promises are what you tend to do during elections, did not help labour either.
Labours way my arse.
Richie Boucher(in the news last week) was in charge of the debt on land banks and development loans for BOI between 2006 to 2009 we are told. After 2010 the debt on Irelands land banks was been written down by up to 90% , the values of Irelands apartments were down 65% and the values of Irelands houses were down 55%. In fact Irish banks have firesold property for as little as 25% of the original purchase price. If property has finally reached its real value(affordable debt value) in 2016, then this means that the debt on Irelands land banks… Read more »
Here is something the grand coalition can get their teeth into. Revoking such legislation may avoid many problems. *Bail-In Regulation To Blame For “Bank Turmoil” In EU? By Mark O’Byrne March 2, 2016 The Financial Times recently looked at how the new bail- in resolutions in the EU, U.S. and most of the western world and asked whether they may be leading to “bank turmoil” and increased concerns about banks and the banking sector in the EU. As is typically the case with coverage of the bail-in regime, the important article was little noticed. Despite this lack of coverage, we… Read more »
The world has lost its moral compass. Politicians, Ivy Leaguers. The end justifies the means. Rip off artists the whole lot of scum. *THE GREAT CORPORATE EARNINGS FRAUD “What are the odds that people will make smart decisions about money if they don’t need to make smart decisions–if they can get rich making dumb decisions? The incentives on Wall Street were all wrong; they’re still all wrong.” ? Michael Lewis, The Big Short: Inside the Doomsday Machine Corporate earnings reports for the fourth quarter are pretty much in the books. The deception, falsification, accounting manipulation, and propaganda utilized by mega-… Read more »
“We’re In Trouble”: Alan Greenspan Delivers Stark Warning
http://www.zerohedge.com/users/tyler-durden Submitted by Tyler Durden on 03/01/2016 17:30 -0500
Last year the European Court of Justice ruled that EU national courts are obliged to examine the issue of “Unfairness In Contractual Terms.” WE ARE STILL WAITING. In my oponion we have – 1. Name your own profit for the state backed stronger party to the contract. 2. Vague and Unclear interest rates arrangements in the contract. 3. From 2003 to 2009 the state backed stronger party to the mortgage contracts were misrepresenting banking best practice with regard to debt ratios and affordability. The intelligent professional lenders of debt unbelievably ignored the basic principles of banking while paying themselves up… Read more »
Ireland:
Fine Gael shows willingness to break impasse: The Irish Times cited Fine Gael leader and acting Prime Minister Enda Kenny who said following last week’s inconclusive election outcome that the party must engage fully and inclusively with other parties, groups and independent deputies to ensure that a government is established. The article reported that other members of Fine Gael suggested this would include talks with main opposition party Fianna Fail, with some members of Fianna Fail indicating a willingness to support a Fine Gael minority government.
Similar to a three legged race that in order to advance both parties must coordinate their actions, communicate to each other and stay in step. Any false move and it shudders to a stop. Perfect fix to guarantee cooperation despite how much either parties hate each other. Keeping it real politics.
“Contrast that with Syria. From the outside, its monolithic, strongman regime was seen as robust but in fact it was very fragile. Without a tradition of doing deals and compromising, the system was unable to deal with negotiations and a small threat to the power ended up destroying the entire country.” The main difference with Italy as the example and the Arab countries that have been destroyed is that Italy was not infiltrated by “rebels” funded by the CIA, US and backed by the war machine of NATO. Libya was destroyed because they suggested to use a currency other than… Read more »
Canada divests of real money just as inflation starts to appear. https://www.dollarvigilante.com/blog/2016/03/04/do-you-own-any-gold-if-so-you-own-more-than-the-bank-of-canada.html I went to the grocery store yesterday just to get my favourite trail mix. It is call Vitality mix. Prices for weeks have been $1.29 on sale to $1.69 per 100gm. yesterday it was $2.29. That is a 20-70 per cent increase. Inflation for sure and getting close to the hyper range of 100% p.a. Food in general has been going up at 10% p.a. Right now an organic cauliflower is $7.50 The gold Canada just sold at $1600 CAD will soon be $2500. 5 years from now… Read more »