IRELAND AND THE NEW NATIONAL QUESTION Paschal Donohoe
Where do you stand on the National Question? This interrogation has historically been code for so many other, much bigger questions. The public response to the royal visit reminds us of a theme that has forged the destiny of our state.
This National Question was about how we could achieve sovereignty through breaking free from an empire. It was also expressed through our relationship with Northern Ireland – would sovereignty be on a 26 or 32 county basis? How were the ‘Irish’ people to be defined? The Peace Process, our membership of the European Union and the globalisation of our economy helped answer this question for a period of our history.
But, if the resonance of this historical question has ebbed, a new arrangement of the National Question is now posing a severe challenge to our state. This paper will analyse the nature of the Question and focus on how it has evolved. Our new Question focuses on how a small open state, with institutions desperately looking to re-build their legitimacy, can manage the opportunities and pressures of globalisation. This is fundamentally different to the challenge that confronted earlier generations of leaders – however some similarities do exist.
This paper will argue that the answer to our modern Question is also rooted in the capacities and strengths that are evident from our history. Our past demonstrates the ‘tool box’ that is necessary to reach out to a secure and stable future. This State has delivered ‘paradigm shifts’ with some spectacular results. The need to rethink the role of Government and deliver innovative and farreaching shifts in strategic policy is pressing, but we have done this before.
In asking Need the Irish Economic Experiment Fail? Kingston summed up the stakes in answering the new National Question with ‘It was assumed throughout the struggle for self-government that Ireland would be able to handle the economic aspects of independence. However…. this assumption is now in serious doubt..’1.
The Historical Question The historical National Question focused on securing our existence as a nation-state, defining our national boundaries and re-setting our foreign policy. The genesis of the Question was illustrated by
Arthur Griffith when he introduced the Treaty of Independence to Dáil Éireann on the 19th of December 1921:
‘It is the first Treaty between the representatives of the Irish Government and the representatives of the English Government since 1172 signed on equal footing… We have brought back the flag; we have brought back the evacuation of Ireland after 700 years by British troops and the formation of an Irish army. We have brought back to Ireland her full rights and powers of fiscal control’.
Many themes developed in the mission for independence. Two are relevant to the new Question. First, self sufficiency was foremost in the historical debate. The goal was to meet national needs with purely national resources. Secondly, this question was about delivering independence ‘from’ an outside force – the British Empire. The theme of autonomy wrought from hostile forces is illustrated by Éamon de Valera in an address at the conclusion of World War II: ‘(Ireland) is a small nation that stood alone not for one year, or two, but for several hundred years against aggression; that endured spoliation, famines, massacres in endless succession; that was clubbed many times into insensibility, but each time on returning to consciousness took up the fight anew’.
The ‘Trade Off’ The context for the evolution of this Question has profoundly changed. Ireland is now expected to be the second most globalised nation in the world2. This is based on openness to trade, ideas, labour movements and cultural integration.
# Position in
2010
2009
2008
1
Hong Kong
Belgium
Belgium
2
Ireland
Ireland
Austria
3
Singapore
Netherlands
Sweden
4
Denmark
Switzerland
Switzerland
5
Switzerland
Austria
Denmark
League Table
Source: AT Kearney/Foreign Policy Globalisation Index
The domination of the globalisation ‘league table’ by small states indicates a common strategy higher exposure to globalisation in the hope of greater prosperity. A ‘trade off’ occurs, where sovereignty is either pooled or diluted in exchange for participation in global economic growth trends.
It is telling that in the depths of the current crisis the quantum of external integration has deepened not lessened. However the global economy has profoundly changed. The roots of deep integration were laid across a period of incredibly benign global economic conditions. This has obviously changed. As indicated below European economic growth trends are now on a different and more difficult trajectory. % Change in
1995 - 99
2000 – 04
2005 – 09
2.49%
1.93%
0.8%
European GDP
Source: IMF
As regional and national growth rates decline the ‘trade off’ between sovereignty and globalisation is far more challenging and has provoked the modern phase of the National Question.
The New Question This was framed by Michael O’Sullivan in Ireland and the Global Question (2006). A ‘Global Question’ was posed: how can a small highly integrated economy independently manage the impacts of globalisation on economic and social life? O’Sullivan articulated the National Question as ‘a desire to maintain the sovereignty and independence of the nation in the face of powerful external forces’3. The decisive factor in maintaining this freedom was ‘whether the state has a framework for dealing with the effects of globalisation on Irish society’4.
This is the strategic challenge that will help define the prospects of our State. We intertwined our national fortunes with the regional and global economy to deliver increased prosperity. However does the State have the capacity to cope with, and manage, external forces when these very forces are inherently volatile and demanding? To put it more bluntly – can the State manage the ‘Trade Off’ when times are difficult?
Similarities exist between this and previous phases of the Question. The issue of sufficiency is again central as our State depends on external institutional funding. There is again a sense of battling
against vast and hostile forces. According to some, austerity is ‘imposed’ and the Government is the victim of ‘extortion’.
Important differences also exist. Ireland can and has benefited from globalisation. This is in stark contrast to our previous position as a colony within an empire. The presence of the International Financial Services Centre with over 25,000 employees is a physical example of how engagement with global capital flows benefits the State. Also, the nature of the contested sovereignty has changed. The previous struggle focused on physical definition, such as the location of national borders. This conception portrayed sovereignty as a ‘zero-sum’ game, with national advancement always at the expense of an opponent. The current focus is on our economic autonomy, where national progress can form part of a ‘positive-sum’ environment. The restoration of Irish economic growth and autonomy need not be at the expense of any other European economy.
Need the Answer to the Modern Question be Negative? But is failure inevitable? As the below table illustrates not of all peer states floundered.
2010
Population Unemployment Surplus(+)/Deficit
Gross Gov
Size (million)
Rate (%)
(-) as % of GDP
Debt/% GDP
Ireland
4.5
13.7
- 32.4
96.2
Denmark
5.5
7.4
- 2.7
43.6
Slovenia
5.4
7.3
-5.6
38.0
Finland
5.4
8.4
-2.5
48.4 Source:Eurostat
The magnitude of Irish under-performance versus peer states is simply shocking. Other states developed capacities to manage the intersection between globalisation and national priorities. The observation of JJ Lee at the end of our last recession has now acquired profound relevance when he wrote that ‘small states must rely heavily on the quality of their strategic thinking to counter their vulnerability to international influences. Without superior strategic thinking, they will be buffeted rudderless, like a cork on a wave’5.
Other small states have demonstrated their ability to respond to the challenges of the National Question. They countered a loss of sovereignty with sharper strategic planning. The ‘trade off’ did
not create an automatic reduction of autonomy where innovation compensated for a pooling of autonomy.
The same potential exists for Ireland but the need is greater. Our participation in an external aid programme means that our sovereignty is impaired not merely ‘pooled’. The paper will now analyse how a demonstrated historical capacity for paradigm change is a key component of our heritage – and must be central to our future.
Paradigm Shifts ‘It is apparent that we have come to a critical and decisive point in our economic affairs. The policies hitherto followed, though given a fair trial, have not resulted in a viable economy’. This blunt and bleak assessment formed the introduction to Economic Development (1959), the blue print for a plan that laid out the path away from aspirations of self sufficiency to export driven economic growth. This strategy was truly revolutionary.
It signalled a strong reversal from a policy and philosophical commitment to protectionism to a strategy based on free trade and gaining foreign direct investment. Agriculture was no longer the sole driver of economic growth. The role of the state was re-set, away from a guardian of budgetary probity towards an active player in generating economic growth. The subsequent ‘Programme for Economic Expansion’ specified a target for economic growth, of 2% per year. It signalled a massive change of political and official mind set, with low economic growth no longer a phenomenon to be decried but a crisis to be tackled. This was a disruption from the inherited conservative role for our institutions of state in economic affairs.
Such paradigm shifts are rare but they do happen. A strategic change of equal magnitude was made in relation to education. By 1973 13.5% of children were in class sizes greater than 45 pupils in comparison to 45% ten years earlier. A signature achievement was the decision to introduce free secondary education for all children regardless of means. Free school transport, the foundation of Regional Technical Colleges and the establishment of the Higher Education Authority accompanied this.
These two paradigm shifts were vital in allowing our state to successfully answer the modern Question. Participation in the global market place by a well educated workforce combined to deliver a ‘catch up period’ after decades of historic economic under-performance.
A similar paradigm shift is now required in the role of our state. The paper earlier noted the existence of a ‘trade off’ between globalisation and anticipated national wealth. For a small state this trade off will automatically lead to reduced sovereignty in the absence of superior strategic thought and planning. Our State now needs to draw on a demonstrated capacity for paradigm renewal to ensure that the impairment of our sovereignty does not constitute our answer to the new Question.
There are 3 Pillars of Paradigm Change that must be delivered to ensure a successful answer to this Question. They are in relation to: -
The Size of Government
-
The Role of Government for ‘dealing with’ Globalisation
-
Public Institutions
Changing the Paradigm on the Size of Government Any debate on the size of government is quickly dominated by constraints on the funding of services. Increasing tax levels is frequently problematic, at least politically. A certain consequence of the sovereign debt crisis is that the cost that governments will pay for borrowing will increase. Higher bond yields, the demands of emerging economies looking to fund their infrastructural development and the possibility of defaults by developed economies will increase the cost of state borrowing.
Creating a target for the size of our State must become a strategic priority. This has rarely been debated in Ireland. It is always a consequence of other decisions. A target must be set to provide clarity for stakeholders and provoke debate on what government should and should not be doing.
History provides a guide. Between 1995 and 2000 taxation as a share of Gross National Product averaged at 38%, and spending as a share of national income averaged 40%. This coincided with a period of national competitiveness and an outlook of sustainability in our national finances. The below chart illustrates the difference between this rule and previous levels of government spending.
Gov Spending as a % of GNP 60 Target Spending Level: 40%
55 50 45 40 35
20 10
20 08
20 06
20 04
20 02
20 00
19 98
19 96
19 94
19 92
19 90
30
This rule has significant implications for the size of government. Clear targets must be set for a spending and taxation as a share of national income and for the relationship between both. A ‘gap’ between expenditure and revenue should be numerated – allowing the development of a clear borrowing outlook for the State. These suggested targets mean that our state should be targeted to shrink below its current size as it exits from this current depression. However it should not shrink to the size of 2000 to 2006. This size was not sustainable as it did not provide a public service platform to cope with the onset of economic difficulty. The lack of clear focus on the size and components of our revenue base during this period has now had catastrophic consequences.
It is not intended that these targets be fixed, regardless of the economic cycle. As tax revenue increases behind economic growth the decision may be taken to amend these economic targets to force more sustainable choices on current spending and capital investment. The inability to review these targets would reduce the ability of the state to deliver counter-cyclical fiscal strategies. This will involve a role for new institutions such as a Fiscal Council, a point developed later in this paper.
A target for the size of government would be a crucial strategic change in how we plan national affairs. It would also act as a prompt for sharper differences between political parties as they would be obliged to lay out their perspective on the size and funding of government. A shift of similar proportions is required for determining the role of our public institutions because if reversion to the same size of government is not suitable neither is reversion to a lack of clarity on the explicit purpose of government.
A New Paradigm for the Role of Government
Tony Judt in his recent passionate advocacy for the renewal for social democracy argued that ‘just as the intermediate institutions of state impeded the powers of kings and tyrants, so the state itself may now be the primary intermediate institution: standing between the powerless, insecure citizens and unresponsive, unaccountable corporations or international agencies’6. This paper disagrees with Judt in his negative assessment of globalisation and inference of a larger state. But he is correct to argue that we must ‘rethink’ the state and that the institutions of state will be more central to the success of small open economies.
The explicit role of government must be to protect the nation from the excesses of globalisation and developing the capacities of citizens to prosper and be secure in a volatile economy. Government must mediate between globalisation and the individual. Kaletsky has described the development of the ‘adaptive mixed economy’7 where government will enhance competition in some areas but play a strong activist role elsewhere – ‘rules will be altered frequently and market incentives tweaked to promote important political objectives because markets will no longer be trusted to decide autonomously on all the adaptions needed for the economic system and society to thrive in a rapidly changing world’8.
A stronger state role is vital in developing the capacity of the individual and the economy. This is an essential element in responding to the modern Question. This is obvious in the increased role in regulation. The recently introduced Central Bank and Credit Institutions Resolution Bill (2011) allows the wind up of failing banks through the necessary suppression of private property rights. The state clearly has a more active role to play in leading the development of the physical infrastructure that is vital for the creation of competitive advantage in areas such as energy, food and communications. This does not always mean direct funding in these areas but it does specifically mean the rejection of the assumption that the market will automatically deliver the right investments for national success.
Evaluation of the role of the state with relation to the individual has centred too much on the axes of Left/Right politics. This has focused on the allocation and availability of social and material goods. Far greater emphasis must be placed on ensuring that individuals have the capacity to make use of these resources. Amartya Sen refers to this as the ‘capability set’ – the freedom of an individual to pursue his or her well being. We must build the capacities of state to help the individual leverage the benefits and inherent risks of globalisation. This will require a stronger state role in life long learning, far greater integration of our social welfare and education systems and constant focus on ensuring educational excellence.
Life long learning is an example of the need for change. 10% of full time students in Irish higher level education are over the age of 23. This contrasts with an OECD average of 20%. The ESRI recently concluded that 25% of those eligible for participation in training schemes were not identified9. It noted that those participating in training saw their chances of gaining a job reduced by 17%. This is indicative of the need for an explicit strategic change in the role of state.
An obvious tension between this change to an enabling state is the commitment to a specific size for government. This is deliberate. This cannot be a recipe for a larger state – but it is a requirement for a stronger state. Kaletsky has described this as the central political paradox for managing the new challenges of capitalism – ‘more government means smaller government’10. The state will not be assumed to be a direct provider of such services instead it should focus on a role as a regulator of quality where services are delivered through a mix of private and public bodies. This change in focus will require a change in the institutional set-up of government.
New Institutions to reflect a New Paradigm A survey of Irish public administration concluded ‘It appears to be particularly difficult for the Irish state to reconfigure existing ways of doing things, or to exit from spheres of activity to which it is committed11’. Allowing the state to deliver a renewed role in answering the modern Question requires sharp redesign of institutions. A State Investment Bank will be required to co-ordinate and directly provide investment into the development of strategic infrastructure. The inclusion of trade affairs into the Department of Foreign Affairs is a starting point for delivering more effective engagement with economic globalisation.
The re-establishment of this Department as a
‘globalisation ministry’ would give explicit recognition of the importance of managing the National Question. The establishment of a Fiscal Council to deliver objective and credible assessments of the budgetary sustainability is imperative. As noted earlier, this body would play a vital role in assessing the level of spending and revenue targets. The Department of Social Protection should ensure that our social welfare and education systems are interwoven together to deal with the inherent volatility of economic circumstances. Reform of Dáil Éireann is beginning but has a long journey ahead in ensuring that parliamentary centrality in political and public life is established.
Finally, the role of participative assemblies needs to be assessed. There is a clear need to find imaginative ways of integrating the views of citizens into policy decisions outside of election cycles. The implementation of citizen assemblies by this Government is a priority for changing paradigms
regarding public administration and institutions. This should not be a ‘once off’ but should be evaluated for permanent inclusion in our governance landscape.
Different Question, Different Answer The answer to the last Question was the establishment of our independence. We must ensure that the answer to the modern Question is not the loss of this very independence through continued impairment of our economic autonomy and weak capacity in the face of economic globalisation.
The ‘credit worthiness’ of our state is not just a financial concept. It resonates with citizens too. We must ensure that the State is not perceived by citizens as a debt collection agency for international bond markets. It must re-legitimise itself by becoming truly credit worthy and a trusted tool for social progress where globalisation is a source of volatility and prosperity.
The OECD has acknowledged that shocks ‘amplified’ by the transmission mechanism of globalisation will pose severe threats to nation states and that ‘there is a palpable sense of urgency to identify and assess risks arising from vulnerabilities in these crucial systems, and to develop policies that will bolster efforts for prevention, early warning and response to ensure sustained economic prosperity12’. Governance can only happen through leadership from Government and our modern National Question must be answered by a State that is explicitly aware of both the challenges and opportunities of globalisation and determined to manage both.
Paschal Donohoe is a member of Dáil Éireann representing the constituency of Dublin Central 1
Kingston, William, ‘Need the Irish Economic Experiment Fail’ in ‘Irish Business and Society
– Governing, Participating and Transforming in the 21st Century’, Gill and MacMillan, 2010, pp 110. 2
‘Ernest and Young Globalisation Index’, reported in the Irish Independent, January 26
2011. 3
O’Sullivan, Michael, ‘Ireland and the Global Question’, Cork University Press, 2006, pp2.
4
Ibid, pp 129.
5
Lee, Joseph, ‘Ireland: 1912 – 1985’, Cambridge University Press, 1990.
6
Judt, Tony, ‘Ill Fares the Land’, Penguin, 2010, pp 196.
7
Kaletsky, Anatole, ‘Capitalism 4.0: The Birth of a New Economy’, Bloomsbury, 2010, pp
190. 8
Ibid, pp 192.
9
Economic and Social Research Institute, ‘Activation in Ireland: An Evaluation of the
National Employment Action Plan’, May 2011. 10
Kaletsky, Anatole, ‘Capitalism 4.0: The Birth of a New Economy’, Bloomsbury, 2010, pp
274. 11
Hardiman, Niamh and MacCarthaigh, Muiris, ‘Breaking with or Building on the Past?’,
Working Paper in British-Irish Studies, No 90, 2009. 12
OECD Reviews of Risk Management Systems, ‘Future Global Shocks – Improving Risk
Governance’, 2011, pp 3.