Sunday, 10 June 2012

We all partied

Two statements define the upper class's reaction to the disaster that crashed the Irish economy in the last five years: the late Tánaiste and Minister for Finance's Brian Lenihan's "We all partied", and current Minister for Finance Michael Noonan's "Emigration is a lifestyle choice".
Both are the statements of people who live in a restricted area of society. From the point of view of these upper-class politicians, these members of a ruling class, they are true. These people do not know anyone - or at least, are not close friends with anyone - whose children have been forced to emigrate for lack of work. If these people and their friends borrowed and spent recklessly, it was not to buy a home for themselves and their children; it was to invest in sources of further profit, to further enrich themselves.
This is not so for the rest of us. I visited a friend in the Dublin Mountains last week. A second son is emigrating to Australia with his wife and children. "I don't know why he's going," he said. "He has a grand job here." His wife said: "He's going to make the money to pay down the mortgage, and to have the kids' university fees." Their son, a highly qualified and expert mechanic, is going to work in the mines. "I've worked in the mines," said his 75-year-old father. "The air pressure down there ruins your health. You're only supposed to work two hours at a time, but they all work full time and overtime, don't tell me they don't."
We all partied: the politicians, mostly men from a background where a steady income had been theirs all their lives, and now in the Lotto class, with unimaginable pensions piling up, with daily access to a huge salary, expenses - even unvouched expenses amounting to the same amount as someone on disability gets every year - invested in apartment blocks and second and third homes; so did the people in the circle within which they moved. The Irish saying had always been "Put your money in land; they're not making any more of it"; the Irish philosophy had always been that land retains its value.
With the coming of the multinationals, and, for the first time in the history of the Irish State, secure jobs were available to a growing middle class. Education had, for the first time in the history of Ireland, been extended to the whole populace. People whose older brothers and sisters had left school at 14 and got on the boats from Dun Laoghaire and Cork to go and work as servants and factory hands and miners were able to go to university, and to get professional jobs.
Joining the EU had opened up farming to grant aid that changed the face of the country, and its exports. I remember cycling from Dublin to Galway, Cork and Donegal in the 1980s and being astonished at the luxury of the farmhouses where I went to ask for water to boil up my tea - the damp, dark thatched cottages with their squinting windows and a crane over the fire were gone; now small farmers were living in five-bedroom detached houses with porticoed doors and 100-meter tarmacadam driveways, fitted kitchens and living rooms packed with silver-framed photos and state-of-the-art entertainment centres. The effect on the country was stunning; we became Europeans. We also bought our own homes.
Historically, Ireland had always had a housing crisis. The annual lottery for council flats was a front-page story every year up until the 1980s, the fact that suicide threats could get you more points on the housing list a constant scandal.
Irish landlords were famous for their pillaging profit-greed, grinding a profit out of every tenant and doing the minimum to keep the rental housing in good nick. A Constitutional case worsened this by choosing the right to property over the right to a decent life, and so ending restrictions on raising rents.
Another friend of mine was renting a room in Dun Laoghaire while waiting on the eternal housing list; when the inspector called she showed him the mould that had grown under the mattress in the week since she had turned it. She told him she was going to move out, because it was dangerous for her baby to live in such conditions. "But that will knock you right down the list, if you move!" he said, horrified at her recklessness in choosing the health of her child over the chance of a council flat.
When Europe and America invested in Ireland, all this changed; at last, a growing class had a regular, good wage, and the possibility of buying a decent home and owning it outright after a few years - the possibility of not having to rely on the Corporation or the landlord.
God never opens one door but he digs a hole in front of it; this good thing was the doorway to a bad thing. Despite the growing education, and the growing equality, there was still massive unemployment, mainly in the class that had less education - because, despite the opening of education to the whole populace, there had been little attempt to give a hand up to those who were unluckily born into poor areas; the impoverished were given no extra boost. So there was a large dole class still, with no skills but their strength.
The combination of the desire for housing and the need for work was the makings of a perfect storm. The dole queues started emptying as long-unemployed people poured into work as unskilled and semi-skilled labourers filling the jobs in construction. Houses were built and bought, and the money was ploughed into more houses.
The price of homes started to rise. In the 1980s, an artisan cottage was £10,000, but the possibility of affording it was remote. People borrowed for a 'car' from the credit union, and used that money as a deposit. By1980, I think it was, the price had risen by 50% to £14,000. It seemed reckless and crazy to go into debt for such an amount.
But the prices went up and up. People were absolutely desperate. Buying your home was like clutching the runners of the helicopter during the retreat from Saigon - once you had it, you were safe. And we sat there watching as the prices rose and rose - and so did the rents.
The thinking was that if the worst came to the worst, you could throw the keys back to the lender and go back to renting. On the other hand, if you could keep paying the mortgage you were sitting pretty.
In 1990, a €45,000 mortgage on a Dublin semi-D cost €550 a month; 10 years after that, a tenant was paying €1,200 a month to rent a flat on the quays. Or an "apartment", as we had now learned to call flats; a "flat" now only meant a Corporation flat, and no one wanted to be associated with such a thing, in our new semi-prosperity.
Ireland was doing well: the educated had jobs in technology or finance or pharma or the professions. The multinationals had hived off companies run by their Irish staff, who were now trading with Europe, the US, the Middle East and the Far East. The construction workers were doing well. Wages were going up and up.
Wages were going up and up. One of the advantages that had drawn the multinationals to Ireland was our membership of the EU. Despite being an island, adding to the cost of exporting, we made a good base for export into the EU. We had instituted a cheap corporation tax because of this island disadvantage, which attracted the corporations. But another part of our attraction was a highly educated and creative population with a wage base far lower than the rest of Europe. Now wages were going up and up.
They had to go up - the price of houses was rising, driven by demand; wages had to go up to pay for the houses.
By 1987, an 1880s redbrick house in the Dublin suburb of Harold's Cross, which had sold for £20,000 10 years before, was worth £32,000. By 1989, it was worth £80,000. By 2007 it was worth £2 million.
More and more people poured into the construction industry. Ireland's roads had been famously winding and pot-holed; Ireland's telephone system had a two-year waiting list for a phone. Europe started pouring money into constructing modern highways and motorways and a 20th-century telecommunications system, making more work for the construction industry.
Ireland had virtually full employment. The councils stopped building homes and started selling those they had to the tenants who lived in them, at super price deals, to increase ownership and 'responsibility'. Former council tenants who had bought houses (famously better built than private housing) for £20,000 sold them for £60,000 and bought a new home and a holiday home, to the indignation of the inheritance class.
By the mid-2000s, the construction business was almost half of the country's industry; 45% of the GDP. If the politicians or the economists who advised them wanted to cool the pressure, they did not know how. We had joined the euro, so the usual option of raising interest rates on loans was no longer available.
Somewhere in the middle of all this, Taoiseach Bertie Ahern revealed that when he was Finance Minister he hadn't had a bank account. How did he get his wages, people wondered - a huge wage packet with his thousand pounds a week or whatever in notes that he would count carefully, licking his thumb as he thumbed through them? Now, he told economists who warned that the economy's dependence on property that they should go away and commit suicide. The boom, he said, was only getting boomier.
Irish people's lives had changed - we were eating and drinking like Europeans; flights and holidays were cheap; spending was good, it seemed, because it spread the profit around.
The enormous power of the construction industry - because in Ireland, moral power comes from wealth - meant no politician was going to suggest the measures taken by other countries, like making it illegal for the value of land to be changed by rezoning from agricultural to industrial or residential; or compulsory purchase by the State of land to reduce profit. After a series of scandals in which State employees were revealed to have profited from planning decisions, the political parties were terrified to lift the lid on any construction problems.
When the bubble burst, the worst hit was the construction industry, the 45% of the country's moneymaking that had concealed the empty heart of the boom. Almost immediately, people who had been working in construction began to emigrate - a neighbour's kid, qualified as a plumber and a year before looking forward to a life of luxury as a self-employed businessman went to Australia, hunted for work for a couple of years, came home, went to London, where he's now working for the railways in a decent but not highly-paid job. He's lucky.
Emigration may be a lifestyle choice for the children of the friends of politicians; for most, it's a hard, grim, realistic choice. It's also a choice that takes the pressure off the same politicians, as they impose new 'austerity' on the poor.
The admitted rate of unemployment in Ireland this week is almost 15%. Nine people per hour are emigrating - most of them from what has been bitterly nicknamed "Generation Emigration": the young, the talented, the ones we need desperately if we are to recover from this disaster. Seventy thousand people a year - and accelerating - are currently emigrating.
Noonan reckons this "lifestyle choice" will be temporary: the young will go abroad, get glamorous jobs, make useful contacts, and return to Ireland in a few years with new skills and the ability to foster new trade. Is he delusional? We didn't all party; only the rich friends of the politicians did. It's not a lifestyle choice, not for most of us.

 Lucille Redmond's ebook, Love, gripping dark and funny stories of love and revolution, is available on Amazon and iTunes

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