Vancouver this week feels like Connemara on a bad day. Clouds at eye level, constant rain and wind; wetness abounds. The Pacific is doing its late spring thing. Apparently it’s beautiful in the summer.
Being back in Canada reminds me of my first time here as an 18-year-old student, an aspiring dishwasher in Toronto of the late ’80s. Ireland had no money, Canada had loads. Ontario was experiencing a property boom, something we’d never heard of in Ireland. The place was coming down with cash, and I was there to bring a bit of it back home. You know the drill: working two jobs, five Paddies to a room, dodgy visas, all that good stuff.
Anywhere was better than Dublin. The repression, the church, unemployment in double-digits and a sense that nothing was possible. Everyone’s older sibling seemed to be abroad and there was no money, anywhere. The government was constantly running deficits, trying to find tax money down the back of the sofa.
Money was flooding out of the country, with thousands of people operating bogus foreign bank accounts to escape Dirt (a tax on deposits). The country was running a current account deficit, meaning that even that straitened 1980s existence was rented not earned. National borrowing grinded relentlessly upwards. Interest rates also rose, compounding the monetary stranglehold that gripped the nation.
Studying first year economics in such a country was like playing a bad joke on yourself, living in some surreal parallel universe, like a Cuban kid studying accountancy or a North Korean studying democracy. We’d schlep into university to be hit with a blizzard of graphs telling us what could be possible in some never-neverland of plenty, where money wasn’t a problem. Meanwhile back in Ground Zero, Ireland exported its people cheaply and imported other people’s money expensively.
In Canada, it was different. It was the land of possibility, a place of abundance. For this young economics student cum dishwasher, Canada seemed to have cracked it. But when I spoke to the locals, they weren’t any smarter than us; they weren’t physically much different, although they did have better teeth. Sure they had land and mineral wealth, but that wasn’t it. The key was that they were part of the North American economy. Each new migrant brought something, and they had enough moolah to talk about the future.
This is crucial – when a country or a person is poor, they live in the present. But when you are rich you can live in the future, you can plan. When you have no money, you need it now, so you have to live in the present. Poverty obliterates the future.
Fast forward to today and Ireland is full of money. This week it was announced that Ireland will luxuriate in a massive €12 billion budget surplus. This is enormous. But it’s not just that the State’s coffers are full: people’s savings accounts are also bulging. Irish people have close to €200 billion on deposit, double what it was 10 years ago.
To use the classic expression of former assistant Dublin City manager George Redmond, we are “very heavy savers”. Looking at the latest official national accounts, the difference between what Irish people are saving and what we are investing is rising constantly. The difference in 2022 was running at just over €20 billion. Add that surplus to the estimated State’s surplus and you get a figure coming up to €33 billion. All this is captured in the current account surplus, which is heading towards 15 per cent of national income.
The country is literally awash with money. So what are we going to do with it?
Unfortunately, from an intellectual perspective, many economists fetishise savings, as if there was some moral superiority to saving rather than spending, falling into the trap of seeing money as a reflection of behaviour. As a result, the profession is far more likely to default to the easy option of squirrelling away money rather than trying to figure out what to do with it. This may also explain why there were reams of academic papers written about the 2008 crisis and its attendant deficits. (Well, actually, these were written after the crisis, as most economists didn’t see the crisis coming.)
Today, as we experience surpluses that are, in relative terms, far more dramatic, we are not hearing much about this conundrum. But agonising about what to do with money is as important as worrying about not having any. Defaulting to accruing rather than deploying is too easy. Money is not just about balance sheets.
Maybe starting with that experience as a kid in Canada, over the years I have come to see money as something different. Money is an energy. With it, a country can achieve great things; without it, a country falters.
If you look at money as an energy, a potent elemental force that animates human ingenuity and enterprise, the surplus of cash looks like a huge opportunity, and sitting on it a monumental waste. Saving at this rate is a failure of imagination.
From an infrastructural perspective, these surpluses could finance housing, or free childcare for everyone, all the time into perpetuity, giving an entire generation a break. A few weeks ago, this column addressed the need for cathedral thinking, such as moving Dublin Port, and creating an entirely new city of 60,000 homes, reimagining the orientation of the entire east side of country with a new port in, for example, Arklow.
In the past, a lack of money ruled out such thinking; today it is a lack of courage.
Money has a magical quality because it motivates humans to strive, innovate and turn ideas into reality. By saving at this rate, we might as well be burying this substance under the ground, waiting for future generations to dig it up and use it. Such behaviour is a betrayal of today for the comfort of tomorrow, hiding behind the sanctimonious veil of savings when what we are really doing is avoiding hard thinking, which after all is what economics is all about.