Fianna Fail and the Fiscal Crisis.

166man

Howdy folks, I have been posting on boards for a while but rarely on the Politics forum, just looking for some advice from some of you more knowledgeable folk out there. Basically I'm currently doing this project for college and we have been given a topic to write about. Mine asks whether or not ''voter affiliation with Fianna Fail contributed to the financial crash'' and I'm a little lost as to where to begin and where to find good sources.

It's due next friday so if any of you have any knowledge on the above essay title it would be greatly appreciated.


Cheers in advance!







*Mods apologies if I'm in the wrong section, feel free to move

Victor

First off you need to define "voter affiliation".

Various theories can be put forward as to why they stayed in power for 14 years and you should examine them.

Fiscal policy, in particular spending once-off tax income on current services and lower taxes, e.g. the SSIA scheme (technically an income tax refund) are the core ones.

PRAF

Could be worthwhile reading the Nyberg Report. I seem to recall Nyberg highlighting the Irish public's support for the government's economic policies as being one of the contributing factors to the crisis.

Scofflaw

I think you have to clarify, first and foremost, the "voter affiliation" point. To me, that would indicate people who would vote for FF no matter what their policies were.

The 2011 general election result is probably a good proxy for that diehard vote - about 17.4% across the country. That many people voted for FF even though they had just recently landed us with tens of billions in bank debt, and run us into an IMF bailout - and if any of them read this post, they will even argue that FF did neither of those things.

Outside that vote you might distinguish a "core vote" which would vote for FF unless they've done something like run us into an IMF bailout. That core vote would probably be fairly well represented by FF's current level of support, about 26-27%, which is in line with what polling companies tend to describe as FF's "core vote".

Outside that, presumably, people are not voting based on a "voter affiliation" with FF, but on the basis of preferring either their policies or their style over those of the other parties.

Looking at the results of the 1997-2002-2007 general elections, it's pretty clear that neither the diehard nor the core vote delivered FF the winning hand. Therefore it has to have been policy popularity either in terms of specific policies, or in terms of policy-making style in general.

The other question, of course, is whether FF's policies contributed to the crash. My answer would be an unequivocal yes - and in a wide variety of ways. We could classify these in three main ways:

1. exacerbating the property bubble: tax breaks for development, mortgage relief, specific schemes like the holiday home development scheme, refusal to investigate planning corruption, encouragement of pro-planning development,shifting the tax base from income taxes to stamp duty and consumption taxes, putting a floor under rents, etc.
   
2. endangering the public finances: benchmarking, decentralisation, shifting the tax base from income taxes to stamp duty and consumption taxes, encouraging massive over-reliance on construction as an employment generator, large increases in social welfare based on the employment glut, etc
   
3. failure to regulate the banks: 'light touch' bank regulation, failure to avoid the concentration of bank lending in property development, giving the financial regulator the job of selling Ireland as a bank-friendly destination, specific pieces of legislation such as the covered bond legislation, a culture of 'golden circle' connections between developers, politicians, and banks, allowing regulatory capture and a groupthink culture within the financial regulatory bodies, etc.

Some of the policies mentioned there were obvious vote-winners - shifting the tax base, benchmarking, decentralisation, social welfare increases - and those policies also contributed most clearly to the collapse in public finances, because FF had ramped up not only actual public spending but contingent public spending - that is, increasing not only the public sector payroll, but the amount that would have to be spent in social welfare payments in the event of an employment downturn - while making the tax base very vulnerable to a recession by basing it on the first things to collapse in a recession, house prices and discretionary spending. Shifting the tax base won votes because it made people feel more prosperous - and thereby had the double whammy effect of exacerbating the property bubble.

Putting these two points together, and looking further to the policies proposed in manifestos from the other parties, I would say that it's clear that FF won the Tiger elections on the basis of their policy approach and specific policies, not on the strength of "voter affiliation" either core or diehard. It is not realistic to argue that FF could have offered any policy platform and still won those elections - they were offering policies that appealed to a vote well beyond their "affiliated voters". Those policies were popular, won them elections, and contributed hugely to the subsequent Irish crisis.

A diehard FF voter would, of course, disagree!

cordially,
Scofflaw

PRAF

Perhaps rather than investigating whether voter affiliation with Fianna Fail contributed to the financial crash, a more appropraite topic could be investigating the extent to which the Irish electorate contributed to the current crisis (through complacency, backing the wrong policies, etc.). Loathe as many people are to admit it, I think the Irish public do have to share at least some of the blame for what went wrong.

Although Fianna Fail were spectacularly incompetent in relation to the financial crash in Ireland, we must also realise that there were systemic issues at play leading up to the crisis. The entire Euro system was imbalanced from the start. The fact that Portugal, Spain, Italy, Greece, and Cyprus have also had a crisis shows that it wasn't purely a FF / Irish problem.

Scofflaw

PRAF wrote: »

Perhaps rather than investigating whether voter affiliation with Fianna Fail contributed to the financial crash, a more appropraite topic could be investigating the extent to which the Irish electorate contributed to the current crisis (through complacency, backing the wrong policies, etc.). Loathe as many people are to admit it, I think the Irish public do have to share at least some of the blame for what went wrong.

Although Fianna Fail were spectacularly incompetent in relation to the financial crash in Ireland, we must also realise that there were systemic issues at play leading up to the crisis. The entire Euro system was imbalanced from the start. The fact that Portugal, Spain, Italy, Greece, and Cyprus have also had a crisis shows that it wasn't purely a FF / Irish problem.

Actually, that doesn't show that there were systemic issues, and certainly not with the euro system. Restricting the sample of troubled countries to he eurozone and concluding that therefore there must be a systemic problem with the eurozone is pure circular logic.

Iceland isn't in the euro, nor is the UK or the US, nor other countries also in difficulties, while Cyprus only entered the euro in 2008, yet these countries have similar problems to the eurozone countries in trouble - which suggests that if there are systemic problems, their scope is very much wider than the eurozone. The suspicious coincidence of the growth in countries' prosperity with the boom in the global financial industry, and the strong crossover between countries in trouble and countries that tried particularly hard to tap financial industry boom, suggests an immediate candidate for those wider systemic issues.

Nor are the difficulties in public finances in other troubled countries the result of the same problematic-but-popular policies of benchmarking or shifting the tax base. However, they are the result, in general, of vote-buying popular policies, and in that sense I'd agree that the voting public bears responsibility, and that that's common to troubled countries in general - they voted for jam today because politicians told them they could have jam today and tomorrow, which turned out, as it always does, not to be the case.

cordially,
Scofflaw

PRAF

Scofflaw wrote: »

Iceland isn't in the euro, nor is the UK or the US, nor other countries also in difficulties, while Cyprus only entered the euro in 2008, yet these countries have similar problems to the eurozone countries in trouble - which suggests that if there are systemic problems, their scope is very much wider than the eurozone. The suspicious coincidence of the growth in countries' prosperity with the boom in the global financial industry, and the strong crossover between countries in trouble and countries that tried particularly hard to tap financial industry boom, suggests an immediate candidate for those wider systemic issues.

Perhaps my previous post didn't prove it but I maintain that there are systemic issues with the design of the eurozone! Many economic commentators have highlighted (indeed so have the original architects of the system) that there were and still are systemic issues with the original design of the euro. For example, the EU / ECB seem to have finally acknowledged that the lack of european banking supervision, lack of a euro area bank recapitalisation fund, and lack of a framework to deal with bank insolvency quite simply have to be addressed now.

Regarding the OP, could we still have avoided the economic calamity that befell us is we had better govt, better regulation, etc? I think we could have. Certainly it wouldn't have been as bad as it was. For that, I think FF are highly culpable but they are not entirely to blame. Their populist and irresponsible politics made the bust much worse than it should have been. The banks, the regulator, the civil service, and the Irish people themselves must also share some of the blame for us not being prepared for the financial crisis.

Scofflaw

PRAF wrote: »

Perhaps my previous post didn't prove it but I maintain that there are systemic issues with the design of the eurozone! Many economic commentators have highlighted (indeed so have the original architects of the system) that there were and still are systemic issues with the original design of the euro. For example, the EU / ECB seem to have finally acknowledged that the lack of european banking supervision, lack of a euro area bank recapitalisation fund, and lack of a framework to deal with bank insolvency quite simply have to be addressed now.

I don't disagree that there are systemic issues - those ones in particular, which are generally part of a failure to build in the necessary regulatory and crisis mechanisms when the euro was originally agreed. As far as I'm aware most of these issues were identified, but not negotiated into the euro by the Member States.

My point is that you can't take the existence of fiscal/bank problems in some eurozone countries as evidence of that, unless those fiscal/bank problems are only found in the eurozone - which they're not. Well, unless of course one believes that the euro should have eliminated any such problems, of course.

PRAF wrote: »

Regarding the OP, could we still have avoided the economic calamity that befell us is we had better govt, better regulation, etc? I think we could have. Certainly it wouldn't have been as bad as it was. For that, I think FF are highly culpable but they are not entirely to blame. Their populist and irresponsible politics made the bust much worse than it should have been. The banks, the regulator, the civil service, and the Irish people themselves must also share some of the blame for us not being prepared for the financial crisis.

There I agree, although we could only have avoided some or most of the crisis - we would still have trade partners in recession, panicky markets, and a global liquidity problem, so I don't think even the best government could have avoided it all. On the other hand, the governments we did have may have exacerbated the crisis in virtually every way they could, but, coming back to the OP, they did so with popular backing well beyond their own core vote.

cordially,
Scofflaw

Victor

Scofflaw wrote: »

Outside that vote you might distinguish a "core vote" which would vote for FF unless they've done something like run us into an IMF bailout. That core vote would probably be fairly well represented by FF's current level of support, about 26-27%, which is in line with what polling companies tend to describe as FF's "core vote".

Core vote is the percentage a party has if you exclude people form the 'don't know' and 'won't vote' categories.

Scofflaw wrote: »

Iceland isn't in the euro, nor is the UK or the US, nor other countries also in difficulties, while Cyprus only entered the euro in 2008, yet these countries have similar problems to the eurozone countries in trouble

Cyprus is a bad example. Cyprus is overly dependent on trade and banking with Greece and other Eurozone countries, making it a proxy Eurozone country up to it's actual entry to the Euro.

Scofflaw

Victor wrote: »

Core vote is the percentage a party has if you exclude people form the 'don't know' and 'won't vote' categories.

Sure. I think I've explained what I mean by it, though.

Victor wrote: »

Cyprus is a bad example. Cyprus is overly dependent on trade and banking with Greece and other Eurozone countries, making it a proxy Eurozone country up to it's actual entry to the Euro.

Not sure how that works, given the problems with the euro are supposed to be with its regulatory structures on the one hand, and the fact that different eurozone countries are supposed to act differently on the other.

cordially,
Scofflaw

Readyhed

166man wrote: »

whether or not ''voter affiliation with Fianna Fail contributed to the financial crash''

Did voter affiliation with FF cause the collapse of Lehman Bros, Bears Sterns
AIG, Citibank,Royal Bank of Scotland, Northern Rock and countless other financial institutions?

Did voter affiliation with FF result in virtually every country in the western world having to bail out it's banking sector?

Did voter affiliation with FF cause David Drumm and Sean Fitzpatrick to run Anglo Irish Bank into the ground?

VinLieger

Readyhed wrote: »

Did voter affiliation with FF cause the collapse of Lehman Bros, Bears Sterns
AIG, Citibank,Royal Bank of Scotland, Northern Rock and countless other financial institutions?

Did voter affiliation with FF result in virtually every country in the western world having to bail out it's banking sector?

Did voter affiliation with FF cause David Drumm and Sean Fitzpatrick to run Anglo Irish Bank into the ground?

Did voter affiliation with FF mean they sat back not worry about re-election and do nothing for over a decade while letting banking regulation slide? letting a massive property bubble happen? and create a completely bloated public service with unions used to getting everything they want?

golfball37

Readyhed wrote: »

Did voter affiliation with FF cause David Drumm and Sean Fitzpatrick to run Anglo Irish Bank into the ground?

No but the voter affiliation ensured Seanie had good golf partners while the Bank was collapsing.

antoobrien

166man wrote: »

Mine asks whether or not ''voter affiliation with Fianna Fail contributed to the financial crash'' and I'm a little lost as to where to begin and where to find good sources.

I suggest getting the dail transcripts for the budget day debates to see what the opposition were saying about measures that were or were not introduced. What the opposition were asking for (e.g. wanting higher SW payments and screaming blue murder when the ones delivered weren't higher) will also have an effect as the government will have to consider this when drafting future policies.

It's also probably worth looking at the manifestos of the opposition over that time to see how realistic & different they were from the parties that ultimately ended up in government.

Scofflaw wrote: »

The 2011 general election result is probably a good proxy for that diehard vote - about 17.4% across the country.

A side point but couldn't the same be said of FG after the 2002 election when they were at their lowest ebb?

Readyhed

VinLieger wrote: »

Did voter affiliation with FF mean they sat back not worry about re-election and do nothing for over a decade while letting banking regulation slide? letting a massive property bubble happen? and create a completely bloated public service with unions used to getting everything they want?

Did they not have to worry about getting re-elected? - Did they not need the support of the Greens to keep them in power?

Banking Regulations were let slide all over the world in an orgy of cheap credit and reckless borrowing and lending. It is absurd to suggest that FG or Labour would have done anything differently.

Does anyone seriously belive that the little old Republic of Ireland would have been sheltered from the global crisis of 2007/2008 had Gilmore and Kenny been at the helm?

During the Celtic tiger years the Dail was full of TDs from FG and Labour (Kenny, Bruton, Burton,Shatter, Gilmore,Rabbitte to name a few). All highly paid with a responsibility to their constutuents and to the people at large to discharge their responsibilities in a parliamentary democracy.

Not one of them ever whispered a word about loose financial regulation or of a property bubble. The war cry was "the country is awash with money - spend more!"

VinLieger

Readyhed wrote: »

Did they not have to worry about getting re-elected? - Did they not need the support of the Greens to keep them in power?

Banking Regulations were let slide all over the world in an orgy of cheap credit and reckless borrowing and lending. It is absurd to suggest that FG or Labour would have done anything differently.

Does anyone seriously belive that the little old Republic of Ireland would have been sheltered from the global crisis of 2007/2008 had Gilmore and Kenny been at the helm?

During the Celtic tiger years the Dail was full of TDs from FG and Labour (Kenny, Bruton, Burton,Shatter, Gilmore,Rabbitte to name a few). All highly paid with a responsibility to their constutuents and to the people at large to discharge their responsibilities in a parliamentary democracy.

Not one of them ever whispered a world about loose financial regulation or of a property bubble. The war cry was "the country is awash with money - spend more!"

Did i say Kenny or Gilmore would have done differently? No they probably wouldnt have but the fact is Fianna Fail were at the helm largely due to the blinkered retardation of "my father voted fianna fail so i vote fianna fail".
And no we wouldnt have been sheltered but we would have been in a far better position. The excuse that "other countries did it so its ok" is bull****, if the other countries ran off a cliff would you do it too? oh wait we did.....

Readyhed

VinLieger wrote: »

Did i say Kenny or Gilmore would have done differently? No they probably wouldnt have but the fact is Fianna Fail were at the helm largely due to the blinkered retardation of "my father voted fianna fail so i vote fianna fail".
And no we wouldnt have been sheltered but we would have been in a far better position. The excuse that "other countries did it so its ok" is bull****, if the other countries ran off a cliff would you do it too? oh wait we did.....

Seem to be contradicting yourself.

The excuse that "other countries did it so its ok" reflects a complete lack of understanding of what caused the crisis. When Ireland joined the Euro we lost control over interest rates and the availability of credit. Cheap easy money became available to Irish People and also Spanish Italian and Greek people at the same time.

The governments of these countries could not control the bubbles that this situation fueled even if they did have the brains to see the dissaster that was brewing.

VinLieger

Readyhed wrote: »

Seem to be contradicting yourself.

The excuse that "other countries did it so its ok" reflects a complete lack of understanding of what caused the crisis. When Ireland joined the Euro we lost control over interest rates and the availability of credit. Cheap easy money became available to Irish People and also Spanish Italian and Greek people at the same time.

The governments of these countries could not control the bubbles that this situation fueled even if they did have the brains to see the dissaster that was brewing.

How did i contradict myself? I agreed they probably wouldnt have done anything different nevertheless Fianna Fail were in power and didnt do anything anyway. IF they had we would have been in a better position. You began the bringing in hypothetical situations im simply following your lead.

So its everyone elses fault FF lost complete control over regulation of OUR banks and that they created a bloated public service?

Readyhed

VinLieger wrote: »

How did i contradict myself? I agreed they probably wouldnt have done anything different nevertheless Fianna Fail were in power and didnt do anything anyway. IF they had we would have been in a better position. You began the bringing in hypothetical situations im simply following your lead.

What I am saying is this:
If they would have done nothing differently then how do you conclude
"we would have been in a better position".

So its everyone elses fault FF lost complete control over regulation of OUR banks and that they created a bloated public service?

No, my point is that in the context of EU membership in general and the Euro in particular our politicians have a lot less power to influence our economy than they would lead us to believe in their election rhethoric.

At the last election the people decimated FF based on the illusion that they could be blamed for everything that went wrong in this country. The result was we ended up with a near dictatorial FG/Lab majority in the Dail and we are suffering the consequences of that in the form of messrs, Reilly, Shatter, Hogan and Howlin ramming unfair policies down our throats with no need to worry about the security of their positions or the effects of a strong opposition.

We need to stop this FF bashing. Not because it is unfair to FF but because it is handing carte blanche to FG/Lab to run this country without regard to the wishes of the people.

VinLieger

Readyhed wrote: »

What I am saying is this:
If they would have done nothing differently then how do you conclude
"we would have been in a better position".

I didnt mean if FG/Lab were in power i meant if whoever was had been concerned with regulation, the bloated public sector, property bubble, this happened to be FF so they get the blame and imo its completely deserved.

I agree maybe they lost control of regulation to europe a bit but you cant blame the public sector problems on europe.

Victor

Readyhed wrote: »

No, my point is that in the context of EU membership in general and the Euro in particular our politicians have a lot less power to influence our economy than they would lead us to believe in their election rhethoric.

Now, yes, but not 5-14 years ago - the 3% deficit rule was too lenient for states that were booming. Interest rates that were too low shouldn't have been coupled with low tax / high spend policies.

At the last election the people decimated FF based on the illusion that they could be blamed for everything that went wrong in this country.

And they could - they were in charge, they were warned, but got into their own groupthink of perpetual growth and ignored those warnings.

The result was we ended up with a near dictatorial FG/Lab majority in the Dail and we are suffering the consequences of that in the form of messrs, Reilly, Shatter, Hogan and Howlin ramming unfair policies down our throats with no need to worry about the security of their positions or the effects of a strong opposition.

No, the present government has had to take away some of the things that the previous governments gave people, but as a nation we had never been able to afford.

We need to stop this FF bashing. Not because it is unfair to FF but because it is handing carte blanche to FG/Lab to run this country without regard to the wishes of the people.

Governments are there to govern, not to pander to peoples' wishes - that is how we are where we are.

Zamboni

There will be a lot of copy and paste into this essay...

K-9

Readyhed wrote: »

Seem to be contradicting yourself.

The excuse that "other countries did it so its ok" reflects a complete lack of understanding of what caused the crisis. When Ireland joined the Euro we lost control over interest rates and the availability of credit. Cheap easy money became available to Irish People and also Spanish Italian and Greek people at the same time.

The governments of these countries could not control the bubbles that this situation fueled even if they did have the brains to see the dissaster that was brewing.

Cheap easy money became available, that money could have been used to finance indigenous exporters and sustainable SME's. Instead we got good things like Urban Renewal Relief rebranded as idiotic schemes like Seaside Relief and every small town and village clamouring to qualify for similar schemes.

When the property market first stalled here in late 06, FF doubled Mortgage Interest Relief to €20,000, people with mortgages of €1 Million qualified for FTB tax relief. People can blame Europe all they want, it doesn't deflect from monumental stupidity in Government policy that fanned the flames.

Readyhed

Victor wrote: »

No, the present government has had to take away some of the things that the previous governments gave people, but as a nation we had never been able to afford.

Governments are there to govern, not to pander to peoples' wishes - that is how we are where we are.

Thats why FG/Lab spent the Celtic Tiger years crying out for measures to control expenditure despite the fact the country was "awash with money"

it also explains why FG/Lab fought the 2011 election on the basis that they would continue with FFs banking plans and impose harsh austerity measures on the Irish people. No way were they going to pander to our wishes!

I remember Eamon Gilmore saying we had to tighten our belts and do things the way Frankfurt wanted! And Leo Varadkar assured us all that we would honour our commitments to international bond holders.

VinLieger

Readyhed wrote: »

Thats why FG/Lab spent the Celtic Tiger years crying out for measures to control expenditure despite the fact the country was "awash with money"

it also explains why FG/Lab fought the 2011 election on the basis that they would continue with FFs banking plans and impose harsh austerity measures on the Irish people. No way were they going to pander to our wishes!

I remember Eamon Gilmore saying we had to tighten our belts and do things the way Frankfurt wanted! And Leo Varadkar assured us all that we would honour our commitments to international bond holders.

So what they werent in power? Stop trying to move the blame off those who actually hand their hands on the controls. If someone crashed a car cus they were going too fast would you blame the passenger for telling them to do it or the person who was actually behind the wheel?