“Four men, a lawyer, a doctor, an engineer and a politician are discussing which of their trades was the oldest, and the lawyer starts by saying that surely it was his because right back at the dawn of mankind Cain killed Abel – the first murder – and that was surely followed by some sort of judicial process which obviously called for lawyers and therefore lawyering had to be the oldest profession but, the doctor shook his head and said that before Cain and Abel, God created Eve from Adam’s rib and this obviously involved some sort of surgery and post–operative care, all of which proved that medicine was the oldest trade but at this point the engineer stepped in and said you’re both wrong because right back at the dawn of creation there was nothing but chaos until God brought heaven and earth out of chaos and this monumental act of creation was the first piece of engineering and what more proof did they need to see that engineering was the oldest of all the professions to which the politician, who had been listening quietly all this time, turned to the engineer, he asked if he understood him correctly – heaven and earth engineered out of chaos – to which the engineer said yes and which the politician in turn replied to by saying, who do you think made the chaos?”
This tale is told in the extraordinary Solar Bones, by Mike McCormack.
This is the issue I want to address this evening – this very sense of turbulence, the role of politics and how we could best respond to these challenges in Ireland.
The context to this debate is clear.
Globally and with the benefit of hindsight, the two decades that followed the fall of the Berlin Wall might now be described as a holiday from history.
Whether we trace this holiday’s end from the collapse of Lehman Brothers or the spectacular political dislocations of 2016, it seems inarguable to me that we live in a world in which we are reminded daily, and sometimes, brutally of the return of history.
Recognising this compels us to look afresh at the basic assumptions, shared understandings and stories that reassure.
Nationally, and speaking as a representative for Dublin Central, which spans the North Inner City to Docklands, I am keenly aware of all the positive changes in our economy and society, but also all that we must strive to achieve; the further progress we must make, for example, in housing and health.
In these remarks, I will point to the deep seated anxieties underpinning much recent change and argue that the continued debate about the political centre is a necessary condition for the wider economic and social renewal we must strive for in order to respond to history’s return.
I also, and critically, want to place this in the context of developments within Fine Gael, particularly since the election of our new leader and Taoiseach.
Setting the scene
Let me begin with some context.
It is striking that some of the most significant disruptions to political order have taken place at a time of economic growth.
For example, much of the challenge to the liberal democratic consensus in Europe is emerging in eastern countries like Poland and Hungary whose economic performance has been very strong.
Cultural and national identity issues are key dynamics.
We only have to look to Sweden, whose egalitarian social and economic model many seek to emulate, for more evidence that a purely economic rationale is incomplete.
Ahead of next month’s elections the head of the Moderate Party recently asked: “Is politics able to do anything at all?”
At the same time, we cannot ignore the economic context.
Francis Fukuyama’s theory of the ‘end of history’ dovetails with the end of the revolution in middle class living standards in much of the Anglo-Saxon world resulting from the post-war boom, albeit that Ireland is an exception to this story.
The figures capture this disjunction starkly.
Between 1946 and 1980 the incomes of the poorest 50 per cent of the American population rose by 102 per cent.
Between 1980 and 2014, they rose by just 1 per cent.
Meanwhile, top incomes soared.
Today, median household incomes in the US are lower than they were in 1999. In the United Kingdom, the real wages of the median worker have fallen by 10 per cent since 2008.
Many of you will be familiar with how disposable income per capita has not grown in line with the recovery in national incomes across many developed countries.
And while we are familar here in Ireland with progress made, as illustrated by the CSO figures of yesterday, we are equally familiar with the many challenges in daily lives.
A common thread is appearing across many democracies, one of insecurity, uncertainty and an apprehension about the future, whether that is caused by economic decline, greater immigration or a general perception among citizens about a lack agency or ability to influence the shape of their society.
With all of this in mind, it is unsurprising that of all the slogans of our turbulent age, none has been more potent than “take back control”.
Control worked as a political message because it gave voters the illusion that there was an easy solution to the social and economic dislocation they have experienced in recent decades as globalisation took hold.
It is no real surprise that the most tangible political reaction to this era of globalisation has taken place in societies that struggled to mitigate the impact of social, economic and technological change.
However, translating the slogan into the reality of governing opens up a very difficult challenge, when control has “been taken back”, and difficulty occurs, who is responsible?
Is it not possible that an agenda of “regained control” of itself spurs a deeper narrative of disenchantment with politics?
A return to normal?
This risk could grow.
The further we go from the global financial crisis that began in 2008, the more tempting it becomes to return to the complacency about our economic system that characterised the period of our holiday from history.
However, in no sense could we conclude that we have returned to anything like normal economic times.
Indeed, the historian Adam Tooze in ‘Crashed’, his majestic recent history of the global financial crisis, argues that the 2008 crisis never really ended.
He shows how the crisis continues to determine how the global financial system functions due to the political decisions and monetary policies of central banks that were put in place to respond to it.
There has been no “return to normal.”
“Conservatism might have been disastrous as a crisis-fighting doctrine, but events since 2012 suggest that the triumph of centrist liberalism was false too. As the remarkable escalation of the debate about inequality in the United States has starkly exposed, centrist liberals struggle to give convincing answers for the long-term problems of modern capitalist democracy.”
Tooze’s stark conclusion represent a formidable challenge to centrist politicians everywhere.
It echoes the worry of our Swedish Moderate as to whether politics is able to do anything at all.
This is encapsulated in a recent piece by Fintan O’Toole where he asked pointedly “Why does the State not work?” listing multiple failures including housing, health, climate change and delivery of infrastructure projects.
His view does not recognise many of our national achievements: our very strong record in creating jobs, our effective income redistribution policies, the dramatic improvement in so many health outcomesand exit from a bail-out programme, which many predicted to be impossible.
More seriously this view treats stability, positive social change and national wealth as incidental to national politics and the State– as opposed to their core achievements.
But he raises many issues that we all know of, that we are determined to make even more progress on.
However, a necessary pre-condition for progress is a constancy of approach, which in essence means deciding on the appropriate economic and social model and having the political commitment and consensus to keep with it across political and economic cycles.
To my mind, the nations that will be best equipped to respond to the impact of social, economic, environmental and technological change are thosethat have understood the paradox that in an era of enormous change, the role of the State, as both a guarantor of social and economic security and provider of opportunity, has become ever more important for those nations – like Ireland – that are most exposed to globalisation.
The challenge for centrist politics here is whether we can we achieve a ‘steady state’ as opposed to lurching from periods of economic and fiscal expansion to steep contractions at least once in each generation since independence.
My contention is that continued thought about the political centre is a necessary condition for this wider economic and social renewal.
Conscious debate can lead to renewal, to help meet the demands of our turbulent era.
Otherwise our political centre will be drawn more by accident than by design, by accommodating preferences rather than setting priorities and by eschewing trade-offs and choices often in favour of fudge.
This matters. But it is a really demanding challenge. The coming months will provide a test of our ability to rise to it.
Ideas and assumptions underpin all political behaviour.
Where we have missed a trick in Ireland is in failing to explicitly link ideas to the political stance of the centre.
As such, in seeking to ground Ireland’s broader social and economic renewal in the political centre, I think it is critical that we are more explicit about the thoughts and ideas that underpin this.
At its heart, centrism is a political philosophy that incorporates ideas from both the left and the right of the political spectrum.
For many, this is evidence of its inherent inauthenticity.
By seeking to reconcile what are claimed to be irreconcilable tensions between labour and capital, state and markets and local and global, critics of both left and right often characterise centrism as a cop-out.
This is an age old dilemma that has determined the contours of political debate.
Adam Smith in both his famed The Wealth of Nationsand his less-known but equally seminal Theory of Moral Sentimentsattempted to reconcile commitments to freedom and equality, markets and the general welfare.
In so doing, he also pointed the way towards a contemporary centrism that seeks to restrain the excesses of free markets while also reaping their benefits for the common good.
As Jesse Norman shows in his magnificent recent biography of Smith, the advocacy of free markets and property rights, by classic liberals like Smith, was directed wholly towards the interests of labour and the welfare of individual workers and their families.
We can contrast this with contemporary capitalism, where the abuse of markets has become a more regular feature and technological progress has continuously increased returns to capital as we see lowering returns to labour – evident in the downward trend in the labour share of national incomes since the 1980s.
Much that is now deemed incommensurate between the left and right of the contemporary political divide – state and market, individualism and collectivism, free trade and economic sovereignty – in successful economies is more notional than real.
We can see how illusory the distinction is merely by observing phenomena as varied as the preponderance of workers on the supervisory boards of German companies, the US government investment that funded much of what we now call the internet, the success of the Nordic “mixed economies” or indeed the prowess of our own domestic public enterprises like the ESB.
As such, in renewing the centre we must seek to reform both the State and the market in the interests of the common good.
An Agenda in Action
In proposing an agenda for social and economic reform, it is important to note that there are limits to what policy itself can achieve.
This is neither an excuse for inaction nor an acknowledgement of weakness but rather a recognition that power is more diffuse and at the same time more concentrated than in the past.
Notwithstanding this, the domestic political choices we make on fiscal policy, public services, labour markets and redistribution will continue to outweigh global forces in tackling the anxieties and insecurities we are witnessing.
With all of this in mind, let me now propose the core elements of a centrist agenda for radical social and economic reform.
Let me also be explicit in arguing that much of this is underway, and this has been re-energized by the election of Leo Varadkar as Taoiseach and leader of Fine Gael.
- A steady state economy:
Well-managed economies are characterised by durable improvements in living standards rather than the ‘all-or-nothing’ approach that has been a feature of Irish economic performance.
In this way, we have trailed other small open economies in the EU, while our propensity to suffer economic shocks and resilience to withstand such shocks has been out of line with these comparator countries.
We must never lose control of our public finances again.
As such, maintaining and developing a steady state economy where we balance our books, invest in the future now and deliver incremental and sustainable increases in living standards over time is the foundation upon which our social and economic model must be built.
This is why we are balancing our national books, paying down our national debt and funding Ireland 2040; our national development plan. This is combined with affordable tax reform and reduction. This is one of the many reasons why I, and the Government, are committed to passing a third Budget and honouring the Confidence & Supply Agreement with Fianna Fáil.
We must also manage the economy to prepare for new challenges.
First and foremost, meeting the commitments in the Paris Climate Agreement will necessitate some of greatest changes to society since the industrial revolution.
The response to addressing this challenge needs to be of similar scale and is treated with a similar urgency across Government.
It is likely that new policies and measures will disrupt the status quo.
While society as a whole will be better off in the long run there will be winners and losers, at least in the short term, so change will be contentious and politically difficult.
We must also prioritise the rebalancing of our industrial strategy with a greater emphasis on building an indigenous system of innovation and improving the productivity of domestic enterprise so that we can narrow the gap that exists between the productivity of our domestic enterprise and multinational sectors.
The is why the Action Plan for Jobs and the creation of the Local Enterprise Offices (LEOs) are so important.
Since 2011, this Government and its predecessor have pursued central elements of this approach – budgetary responsibility, active labour market policies and a broadening of the tax base.
Under Fine Gael, a steady economic state is the foundation of changing our society.
- A social agenda for a modern Ireland:
Ireland today is unrecognisable from the time of the last papal visit in 1979.
And social change is accelerating.
This Government and its predecessor have delivered profound reforms like marriage equality, repeal of the eight amendment to the Constitution, more secular school patronage and the introduction of gender quotas at election time.
However, much more remains to be done.
We must find a way to accommodate the plurality of religious and spiritual communities in our ever-more diverse society.
Equally, the full participation of women in our society and economy must be delivered by closing gender pay gaps, equal representation on both State and private company boards, better childcare and extended and equal parental leave.
We must continue to modernize our constitution to reflect this new modern Ireland.
- Redistribution and ‘pre-distribution’:
As is well-understood, our tax and welfare systems are among the most redistributive in the OECD and social transfers perform a very significant role in reducing inequality.
Their success can be observed in the fact that uniquely among countries that went through an international bailout, Ireland witnessed no increase in inequality.
However, the very success of this system in correcting for our high levels of inequality of market income should not prevent us from tackling the deeper-seated causes of poor market outcomes.
This is why we are increasing our focus on policies that seek to tackle income inequality before redistribution.
This so-called ‘pre-distribution’ agenda is broad and encompasses many policies we are already advancing, including labour market reforms, education initiatives that increase investment in pre-school, lifelong learning and vocational training,like apprenticeships,as well as increased access to third level in areas where participation is low; and wider market reforms that tackle the cost of living by boosting competition and consumer protection.
All of this is underway.
But we will redouble these efforts with our Future Jobs programme later this year.
In addition to inequality of market income, an unequal distribution in the ownership of assets is a distinctive feature of our political economy.
As Thomas Piketty has famously shown, the returns to capital over time exceed those of income growth.
Equally there are divergent returns to capital between large and small investors.
As such, the wider dispersal of asset ownership through universal pensions and the development of affordable housing has a critical role to play in mitigating market inequality.
The recently launched roadmap for Pension Reform is aimed at how we increase access to an asset that makes a fundamental difference to living standards – a funded pension.
On affordable housing, as the National Economic and Social Council has recently shown, the availability of land for housing in appropriate locations, in a way that is consistent with affordability, has long been an unresolved policy issue in Ireland.
We are therefore improving the manner in which we plan, manage and use land in our urban areas.
Increasing investment in housing and changes in planning regulations and processes have increased the supply of homes. But we will fund new ways to better deliver land in a coordinated manner in the public interest.
As one of the world’s most globalised societies and economies in the world, it behoves us here in Ireland to play a central role in the future of Europe and the world at large.
Our decision to join the EU bolstered our independence by sharing aspects of our sovereignty with our European allies and enabled us to chart a wider course for our country away from our historical domination by Britain.
Membership of the EU has modernised our economy, society and politics and delivered peace and prosperity.
Brexit and challenges to multinational global cooperation fundamentally change our policy neighborhood.
We must rise to this challenge.
There has never been a time when a re-foundation of multilateralism has been more critical in the face of the fracturing of the liberal order and a resurgent nationalism.
While the nation state remains the locus of political deliberation, some of the most pressing challenges of this century, including climate change, artificial intelligence & automation and security can only be tackled at a multi-lateral and supra-national level.
The Global Ireland plan recently launched by the Taoiseach and Tanaiste clearly demonstrates our commitment to being an island at the centre of the world.
Having made the case for the renewal of the political centre as a necessary condition for wider economic and social renewal, I would like to draw my remarks to a conclusion by emphasising that Fine Gael is the only party that can deliver this change for a modern Ireland.
Unlike countries like the UK, US and France whose political systems have been shaken up by disruptive outsiders, the realignment in our politics has largely taken place within the existing party system.
Fine Gael is the only party that can combine an understanding of a modern economy and a modern society. No other party offers both.
Meanwhile, under the leadership of Leo Varadkar Fine Gael has become a rainbow coalition of the centre, which at its heart pursues the values of modernity, openness, pluralism, tolerance, opportunity, responsibility, care and aspiration.
We more truly reflect where the centre-ground lies in the Ireland of 2018 than any other party.
We are theparty of a modern and changing Ireland.
The Taoiseach and those who work for him know what more needs to be done.
Unlike others, we are prepared to challenge our previous assumptions in seeking what is best for the country.
From the social change we have implemented, to the safety nets we have strengthened and the opportunities we have delivered, Fine Gael has refreshed our agenda for a modern Ireland.
We stand for the many who seek a better life for themselves and their families.
Modern Ireland looks to the political system to deliver both personal and societal aspiration – achieving our own full potential and that of our country.
We share these aspirations.
And we are determined to achieve them.
Thank you very much for listening to these remarks and I look forward to our discussion.