Ireland, Greece, Spain, Portugal: a same European ‘peripheral’ problem?

The financial and economic crisis that has hit the world and Europe since Autumn 2008 has had its most severe impact on a few European countries, countries that are often referred to as ‘peripheral’ from the standpoint of the geography of Europe or the EU: Greece, Ireland, Spain and Portugal. Does that mean that their geographically ‘peripheral’ position is at the heart of their current financial and economic problems? Not really. Or maybe, somehow. Maybe it was their location on the margins of Europe that played a part in their lagging economies compared to their EU partners in the 1970s and 1980s as they all joined the EU (1973 for Ireland, 1981 for Greece, 1986 for Spain and Portugal)? And maybe that explained to a certain extent the ‘fast-track’ paths to economic growth that some of them went for then, with the support of European funding for infrastructural upgrades in particular, but also based on what Henri Sterdyniak, from the OFCE research center, has called “macroeconomic strategies that have become illusory”. And that’s precisely what’s more important than their ‘peripheral’ location: the fragility of their respective economic development model. In the case of Ireland, that has been largely explained, discussed, documented through many posts on the Ireland after NAMA blog (since its creation at the end of November 2009, almost a year ago now) and other forums such as Politics.ie or The Irish Economy among others. But there hasn’t been too much discussion about how the Irish model compares to its ‘peripheral’ counterparts and what lessons Ireland could learn from them and their own crisis as it looks for a way to get out of the crisis and to rebuild its growth and a (hopefully) viable growth model. There’re a few things that I would like to highlight to that effect.

The Irish and Spanish experiences have been quite similar so far. Their public debt was quite low, their growth levels quite high, but in both cases growth was heavily reliant on real-estate and financial speculation. In Ireland, at the end of 2007, loans for real-estate development amounted to 250% of the GNP. That made for a huge real-estate bubble, the same kind of bubble that exploded in Spain a few months after the Irish one. While a large amount of the bursting of the Irish bubble is being cleaned up by NAMA, Spain has not created its own toxic bank to absorb the current 325bn euros of debts of the real-estate sector.

Portugal and Greece are in a different situation. Their major problem has been the lack of growth in the past decade or so (while Ireland and Spain were experiencing high levels of ‘growth’, but one that was highly illusory given its speculative nature). Their main problem is that their governments have been very keen on entertaining the idea that growth was happening: to international investors, to their own population, and to EU officials. They did so through rather irrational budget decisions. While Greece deliberately falsified and concealed its high levels of public debt and justified 4% annual growth since 2000 by emphasizing the performances of its real-estate industry and tourism (two sectors that are highly volatile), Portugal went overboard with public spending to stimulate domestic consumption while it struggled to boost the growth of its leading industries and main exports (e.g. textiles).

Among the four countries, Ireland is actually the only one that has developed a real and successful export-oriented economy, in particular in knowledge-based sectors such as (e.g.) pharmaceuticals, electronics, software …etc. But the problem is that the success of this strategy relies to a great extent on the very low corporation tax (12.5%, as opposed to 25.7% on average across the Euro zone, almost 30% in Germany, and over 33% in France). And this is something that may be challenged in the near future as part of the EU/IMF bail-out package that is currently negotiated. As noted in a post from yesterday by Rob Kitchin, the IMF has indicated in its position paper on structural reform in the Euro area that harmonization of macroeconomic policies should be a priority in the Eurozone, and an harmonization of the corporation tax across the area, or at least some degree of convergence, is not to be excluded. This does not mean that firms are necessarily going to massively flee out of Ireland if the corporation tax is raised by a few percentage points. While the potential short-term negative effects of raising the corporation tax has recently been discussed by Chris van Egeraat in another post on this blog, there are also a series of factors that make firms more locally-embedded than implied by the hypermobility of capital argument mobilized by those in favour of maintaining a low corporation rate in Ireland. I’ll leave that aside for the moment, and I will pick up on another point raised by Chris van Egeraat in his post and many others in the past few months, which is the fact that Irish recovery and a viable Irish economic model cannot be built upon a low taxation model. It needs to be rebuilt on strong foundations, including a proper industrial policy, that would send the right ‘signals’ to global markets and international investors, i.e. the image of an economy that is actually managed and doesn’t threatened to spiral out of control again.

A major problem here is that it is going to be very difficult for Ireland, but also Greece, Portugal and Spain to build the foundations of a strong economic model with the austerity plans that are currently being designed or implemented because the priority being the reduction of national deficits through major cuts in levels of public spending, this leaves close to nothing to support these sectors that could create a solid base for these economy (e.g. textiles in Portugal, food industries in Spain and Greece, new technologies in Ireland). That includes, for example, continuous funding for education to keep training indigenous youth, mentoring and internship programmes to help graduates enter the workforce, financial and structural support for start-ups to create jobs ….etc (as discussed in this post for example). If their respective economic bases do not solidify in the next few years, all four countries are likely not only to be prone to future crises of the sort that we are dealing with right now.

Delphine Ancien

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The National Spatial Strategy update – More of the same old “same old”

The National Spatial Strategy (NSS) was back in the news last week with the publication by the Department of Environment, Heritage and Local Government DOEHLG) of its NSS 2010 Update and Outlook coinciding with the presentation at the annual conference of the Royal Institute of Architects of Ireland (RIAI) of a number of papers dealing with the NSS.

Almost eight years have passed since the original launch of the NSS, “a twenty year planning framework designed to achieve a better balance of social, economic, physical development and population growth” between the regions of Ireland.  The key element of the NSS was the development of a number of regional “gateway” cities with the idea of creating the level of “critical mass” required in order to achieve self-sustaining growth and act as countermagnets which would slow down the apparently relentless concentration of development in the Greater Dublin Region.

Today, almost halfway through the NSS plan period, it would not be too unfair to suggest that the only visible signs of the strategy’s existence are a number of billboards around the country identifying some urban centre or other as being a gateway.  The now largely-complete motorway system was conceived and installed largely without reference to the NSS and in some ways could be seen as inhibiting the emergence of the polycentric urban system which the NSS sought to create.  Otherwise, the sprawl of housing and other forms of property development which has peppered the landscape over the last decade would, quite understandably, lead any visitor to the country to conclude that no form of planning of any kind operates in this country.

Unfortunately, the DOEHLG’s NSS Update document offers little prospect, not only of the NSS itself ever being implemented, but of any real progress being made towards checking the uncoordinated chaos which characterises most things that happen in this country. One arrives at this conclusion, not from what the document, states explicitly, but from the way in which it reproduces virtually all of the key weaknesses of the original 2002 strategy statement, or fails to address key obstacles to the strategy’s implementation which have remained unchanged since 2002.  Among these are the following:

• The lack of government commitment to the NSS.
• Failure to acknowledge – never mind pursue – the level of spatial selectivity in the allocation of public resources required if the gateway centres were ever to achieve their supposed development goals.
• The absence of concrete implementation measures.
• Failure to identify the governance structures required for successful NSS achievement.
• Preoccupation with physical planning considerations and accompanying failure to address the crucial role of enterprise development policy in creating the critical mass required for self-sustaining growth in the gateway centres.

The Ministerial Foreword to the NSS Update contains the almost portentous statement that the document comprises “a re-affirmation of the Government’s commitment to the NSS”.  Given the commitment to the NSS shown thus far by the government, this could be construed as the kiss of death for the NSS.  This, after all, is more or less the same government which, within a year of the publication of the NSS, announced its disastrous decentralisation programme which not merely completely ignored the NSS but actually served to undermine it.  This, despite the explicit commitment in the original NSS document  that “The Government will take full account of the NSS in moving forward the progressive decentralisation of Government offices and agencies” (p. 120).

This is also the government which, in virtually its first move to curtail public expenditure following the onset of the current economic crisis, suspended the €300 million Gateway Innovation Fund which had been included in the 2007 National Development Plan – one of the few concrete measures proposed by the government specifically designed to help the NSS achieve its goals.  This was a fair reflection of where the NSS is located in the government’s list of priorities.

In his paper to the RIAI conference, planning consultant Conor Skehan criticised the NSS for “pretending to offer something for everyone in the audience”.  This was reflected in the designation as gateways of urban centres which had absolutely no hope of reaching the scale of activity and population which the NSS document itself identified as being required of gateways; of the inclusion in the NSS of eleven “hub” towns whose role in the strategy remains a mystery; which identified county and other larger towns as being “critical elements in the structure for realising balanced regional development”; which saw medium-sized towns in each region acting  as “local capitals” providing a range of services and opportunities for employment; and which envisaged smaller towns and villages helping rural areas to draw on “local economic strengths”.

The Update document repeats this (obviously politically-driven)  “something for everyone” approach with passages such as: “a key element of the Strategy is the promotion of a scaled multi-centred settlement strategy comprising a national network of gateways, hubs, county towns, smaller towns and villages with an appropriate critical mass and agglomerations of scale to drive regional and local development”.  Indeed, the use of the terms “critical mass” and “agglomerations of scale” in this context suggests that the authors of the document have no idea was these terms mean.

The logic of the gateway centre concept, as identified in the European Spatial Development Perspective (adopted as a preferred approach to spatial planning by the EU in 1999) is that smaller towns and rural areas cannot compete on their own in today’s globalised market place, and that their long-term interests are best served through the cultivation of regional centres which, through focused development measures, can become internationally competitive in their own right.  These, then, come to act as “gateways” through which investment and innovation are brought into the regions and through which regional exports and communication lines are channelled (interestingly, the derivation of the term “gateway” is never explained in the NSS document).

An important element of the gateway concept is that, while gateway centres, through the creation, for example, of specialist expertise or services, act to attract outside investment, such investment may not necessarily locate in the gateways themselves, but may choose instead to locate in smaller centres in the gateway hinterlands.  The hinterlands may also benefit from the generation of spin-off enterprises from the gateways, from the location in the hinterlands of commuters employed in the gateways, and from recreational travel on the part of gateway residents.

Ultimately, it is argued that regional hinterlands will end up better off through the presence of gateways than without them.  However, at least in the initial stages, this approach requires a concentration of resources in order to get the gateways off the ground.  While this approach has echoes of the unbalanced development strategy advocated by Albert Hirschman for less developed economies in the 1950s, it does possess more logic than the scattergun approach of the NSS.  This is not to say that there is no place for smaller centres, rural areas and local initiative in the spatial planning process.  However, planning at this level is properly a function for regional and local authorities with appropriate powers and funding and has no place in a national-level strategy.

Also speaking at the RIAI conference, Edgar Morgenroth of the ESRI criticised the NSS for being “largely aspirational, with few concrete measures.  What’s really missing is any adequate thought about what we are really trying to achieve and how do we make it happen”.  This is a problem which is repeated in the Update document, which time and again (and regularly echoing the original NSS) tells us what needs to be done but says little or nothing about it will be done.  The document is replete with passages of the following kind:

“Existing arrangements must be improved for investment co-ordination…”

“There is a pressing need to deliver more effective leadership…”

“Strong and successful Gateways need to be able to transcend administrative boundaries…”

“Implementation and review of sub-regional land use and transport strategies (LUTS)

outside Dublin and Cork should be strengthened…”

Remember, these are taken from a document which purports to update a strategy which was first launched eight years ago.

Measures for realising these aspirations are either non-existent or vague, as reflected in the following list of actions to be undertaken (curiously tucked away in an appendix at the end of the document):

• Develop proposals for more effective co-ordination and implementation of regional plans and strategies.
• Progress implementation of the Atlantic Gateways Initiative.
• Publish an analysis of critical infrastructural requirements.
• Finalise arrangements for the revised Gateway Innovation Fund.
• Finalise White Paper on Local Government.
• Assess and monitor local authority development plans for consistency with the NSS.

Again, the absence of concrete measures and commitments is striking.  It is difficult to avoid the conclusion that what we have here is a fundamental inability to make firm commitments in order to avoid offending anybody, along the same lines as the inability to be spatially selective in the allocation of public resources.  This is the kind of systems failure which has Irish politics, the Irish economy, and Irish society in the sorry condition in which they find themselves today.

One of the few positive elements of the Update document is its acknowledgement of the failure of the original NSS to address the governance issues posed by the strategy.  It would appear that the NSS simply assumed that neighbouring local authorities, frequently with a long history of mutual competition and rivalry over territory, commercial rates and other resources, and lacking the requisite skills, powers and funding, would voluntarily come together to forge the kind of proactive and visionary planning alliances which gateway formation requires.  It quickly became apparent that this was not going to happen, and the need to address the governance issues posed by the NSS were key foci of the report on the implementation of the NSS published by Forfás in 2006 and in the National Economic & Social Council’s 2008 publication The Irish economy in the early 21st century.

Thus, among the priority action areas identified in the Update document are the following:

“Strong and successful Gateways need to be able to transcend administrative boundaries and have a clear vision of their future development and a strong strategic leadership to deliver that vision aided by effective governance arrangements, embracing not only public sector agencies but also the private sector and leaders in research and innovation”.

“Existing arrangements must be improved for investment co-ordination, sectoral alignment and planned prioritisation between the capital investment activities of Government Departments and agencies, and the planning and development activities of regional and local authorities”.

“There is a pressing need to deliver more effective leadership and vision and better governance structures at regional and local levels to lead and drive development of the gateways and their wider regions”

Again, the Update document is devoid of specific proposals on how these objectives are to be achieved, apart from the Minister’s own favourite hobby horse i.e. a directly elected Mayor of Dublin.  Instead, we are told that these issues will be addressed in the supposedly forthcoming (and long promised) White Paper on Local Government.  Of course, even if the White Paper does set out concrete measures for dealing with the governance issues which currently comprise a fundamental obstacle to NSS implementation, the fate of previous White Papers on local government and administrative reform provides little reassurance that these measures will ever actually see the light of day.

Ultimately, the greatest single weakness of the original NSS document was its failure to address in a meaningful way the fact that successful gateway development requires the cultivation, in each gateway, of a vibrant and self-sustaining enterprise base built around a set of successful exporting firms.  The document mainly focuses on providing the physical and social infrastructure required for the successful functioning of enterprises, and has virtually nothing to say about how these enterprises are to be established in the first place.  It may be that this reflected old-fashioned thinking that if you build the infrastructure, the firms will come, but more likely it reflects the fact that the Spatial Planning Unit which oversaw the preparation of the NSS was located in the Department of the Environment, Heritage and Local Government which has lots of physical planning expertise but very little (if any) enterprise development expertise.

The Update document portrays the same weakness, with considerable attention devoted to aspects of physical planning and virtually none to enterprise development.  This is seen as being a matter for the enterprise development agencies, but no particular structures are identified, either in the original NSS or the Update document, to integrate these agencies as key actors into the gateway development planning process.

In principle, the main objectives of the National Spatial Strategy make a lot of sense and probably offer the only feasible long-term path to autonomous self-sustaining development in the Irish regions.  However, major recasting of the state’s governance structures is required if these objectives are to have any chance of being realised.  Governance structures at regional level need very substantial strengthening, and a major devolution of functions and powers to both regional and local level is essential in order to facilitate effective coordinated planning.  In addition, the medieval territorial structure with which local authorities are lumbered needs to be replaced by a new territorial system based on the main urban centres and their hinterlands as combined units (the norm in other European countries).

In the absence of such reforms, the NSS essentially is a waste of time and resources.  The fact that such reforms have a zero chance of being implemented is testimony to the essential dysfunctionality which characterises most aspects of the Irish state.

Proinnsias Breathnach

 

When is a property a new property?

Here’s another normative question as per the land banking post last week.  When is a new property a new property?  The question arises because cash-strapped developers have been renting out the properties they have been unable to sell (see here for more details).  As far as the Revenue Commissioners are concerned this means that the property now becomes ‘second-hand’ and therefore liable for stamp duty except for first-time buyers.  It seems that the stamp duty exemption only applies if the property is sold immediately after construction or are not lived in prior to sale.  The CIF and the developers it represents wants a change so that the properties are considered ‘new’ up until the first time they are sold.  Their argument is that it penalises developers for trying to find a cashflow and make ends meet by making the units less attractive to buyers (who have to pay the duty).  And by default, it penalises buyers who previously wouldn’t have been liable for the duty.  The flip side is that the property is clearly not ‘new’ in the sense that people have been living in it and, at a time when the state needs all the revenue it can generate, any change in the rules will deny a source of duty.   So, the question is – at what point does an unsold property stop being a new property?  When it is first lived in or when it is first sold?

Rob Kitchin

 

Strategic planning versus housing vacancy in Cork

According to the 2006 census there were 51,441 housing units in Cork City of which 6167 were vacant (exc. holiday homes).  Between Apr 06 and end of 2009 the DEHLG housing completion data reveals an additional 3,579 units were built.  To put that in perspective, in 1996-2006 the number of households increased by 2,636 well below the vacancy and new build rates.  At the same time, Cork’s development over the last decade offers one of the best examples of plan-led development in Ireland. The Cork Area Strategic Plan and the Cork Docklands Development Strategy both aimed to implement an approach to development that was coordinated at the urban and regional levels, and aimed to stimulate growth that was in line with NSS guidelines and best practice in spatial planning.  So, if Cork followed an evidence-based approach to planning for development, why is it now suffering such high levels of vacancy?

There are a range of factors that influence this.  For one, development in Cork has suffered from unfortunate timing.  For the last decade, the projected growth expected from the docklands project has informed the scale and type of development in Cork city.  Cork is not characterised by urban density and does not have a legacy of apartment living.  The docklands project sought to fundamentally alter this pattern.  The project planned to stimulate the growth of the knowledge economy in Cork city by providing new office spaces in the docklands.  Additionally, the docklands would provide a range of new amenities (schools, parks, crèches, bars, restaurants, cafes) that would encourage both single residents and families to live and work in the city centre.  By the time the recession hit, the docklands project had yet to really get off the ground.

However, the developments that had happened in the city had based themselves on these projections.  Thus, developments like the Elysian that aimed to capitalise on the emerging trend towards apartment living were coming on stream at a time when the property market was imploding, making them an even more risky proposition in that they not only had to contend with a distressed market but also battle against entrenched consumer preferences.  At the same time, new housing estates were being developed in the suburbs.  Many of these came on stream at the wrong time.  Additionally, many prospective buyers had been priced out of the market as property prices soared, forcing them further out into the county.

Similarly in the County, expected growth was predicated on the designs of the CASP to create a commuter zone around the metropolitan city region.  Many speculative housing developments sought to capitalise on these trends.  Both the CASP and the CDDS are long-term strategies that were only beginning to see tangible results over the last three or four years.  As such, the recent surge of development interest in Cork was unfortunately in synch with the crash.

While these projects were certainly based on a strong rationale couched within the logic of spatial planning, it should also be said that the levels of growth expected from these strategies was excessive; the outcome of entangling reasonable and sensible projections with the fever dream of the Celtic Tiger.  Furthermore, even though Cork attempted to implement an evidence-based forward planning approach parts of the city and county were also characterised by the type of ad-hoc and clientalist developmental practices seen in other counties.  As David Counsell suggests in his study of the CASP, while on paper the plan suggested a coordinated effort by City and County Councils to plan and manage the growth of the region, the actuality was more fragmented.  Local Councillors still managed to rezone land for  development in towns and villages upon which massive housing estates were built that were in excess of reasonable demographic projections and against the objectives of the CASP.  Many of these developments are now unfinished ghost estates, while others are situated in areas without proper social provisions.

Rather than indicating the futility of evidence-based planning, the case of Cork demonstrates the problems associated with the fragmentation of the Irish planning system.  In the absence of joined-up planning, local authorities have only limited abilities to guide development in coordinated ways, and are often at the whim of local Councillors and developers.  While Cork certainly was not immune from the frenzied over-development of the Celtic Tiger period, the fact that to a certain extent this development followed a coherent plan means that in the long-run this may not be as destructive as in other counties, where development has left run amok without rhyme or reason.  Furthermore, it speaks more fundamentally about the difficulty of implementing a strategic approach to planning in the Irish context.  Because of the vagaries of planning structures and the lack of statutory regional policies, strategic planning is constantly challenged and undermined.

Cian O’ Callaghan and Rob Kitchin

 

Electoral Politics in the NAMA era 2: Who will win the next general election?

Having discussed when the next general election will take place (see below), the next question is: who will win this election? A number of commentators have almost taken it for wrote that Fianna Fáil will lose power after the next general election, while others suggest that the Green Party could lose most, if not all, of their seats in Dáil Éireann. But will this prove to be the case and is a Fine Gael-Labour coalition virtually certain to take power after the next election?  I’d suggest that we can consider a number of potential scenarios here:

The Zombie scenario aka the “It’s Not A Case Of If But When” scenario: This scenario effectively mirrors the situation in the UK in the mid-1990s where John Major’s Conservative government clung to power until the bitter end before getting hammered by Labour in the 1997 election. This sees the current government’s popularity levels continuing to remain low, with Fianna Fáil support ratings remaining in the low-to-mid 20s and Green Party support falling below the 2 percent level. The election proves to be a nightmare for the government parties. Fianna Fáil end up practically losing a seat in every Dáil constituency (bar Laois-Offaly!) and even losing two seats in some constituencies, leaving the party without a TD in some constituencies such as Kerry North, Dublin South East and Dún Laoghaire. The Green Party fails to even come close to holding any of their six Dáil seats, most of which fall into the hands of the resurgent Fine Gael and Labour. With the number of Fianna Fáil Dáil seats left in the mid to high 40s, their only hope of retaining power lies in a left-wing coalition with Labour and Sinn Féin dashed by Labour’s reluctance, even in the face of being promised “the sun, the moon and the stars” by Brian Cowen, to be the party that revives the zombified corpse of Fianna Fáil. Brian Cowen becomes the first ever Fianna Fáil leader to leave his post while the party is in opposition, and the party faces into an uncertain future, facing the prospects of being out of power for longer than one Dáil term.

Likelihood: Given the volatile nature of the Green Party support base and the party’s dependence on vote transfers from Labour and Fine Gael in recent general elections – which are likely to dry up in 2011/2012, the prospects of a Green whitewash at the next general election are real. But, as we get closer to the next general election, I would expect Fianna Fáil support levels to recover on their currently low levels and the 25% level recorded in last year’s local elections.     

The Frankenstein scenario aka the “Sure, It Could Be Worse” scenario: Popularity ratings for the government parties start to improve somewhat during the final years of their term in office, re-electrified by evidence of a recovery in the economy, to the point that, after a competent campaign wherein Fine Gael and Labour fail to delver a killing blow, support levels for Fianna Fáil and the Green Party in the general election are down on their 2007 levels, but not dramatically so. While the Greens lose over half their seats, only retain two of their seats (Dublin North, Dublin South), their electoral performance proves to be better than expected and they also poll respectably in constituencies such as Clare, Cork South Central and Louth, leaving the party with hopes of regaining their lost seats and claiming new seats at a subsequent general election after another period in opposition. Fianna Fáil percentage share of the vote falls in the mid-to-high 30s and, though this represents the party’s lowest share of the vote since they first won power in 1932, the better than expected electoral performance means that they remain the largest party in the state in terms of Dáil seats and the party engages vigorously in post-election negotiations to form a government. While Fine Gael and Labour win a sufficient number of seats to from a government with a small majority in Dáil Éireann, Fianna Fáil manages to stay in power by offering Labour a deal that “they can’t refuse”, including an acceptance of virtually all aspects of Labour’s election manifesto and an agreement to rotate the post of Taoiseach.

Likelihood: Not by any means beyond the realms of the possible, especially given the existence of a residual personal, or localised, for individual Fianna Fáil candidates (“good constituency workers”) even at the worst of times. While Fianna Fáil (at 22%) currently trail Labour (at 24%) in the opinion polls, as we saw with the local elections, when it comes down to the actual voting Fianna Fáil will tend to outpoll Labour significantly mainly because of Labour’s weaker party organisation and the significant areas within the state where Labour Party support is minimal or non-existent. As for Labour going into power with Fianna Fáil, well that’s not likely surely…oh hang on, what about 1992!!!

The Dracula scenario aka the “They Haven’t Gone Away, You Know” scenario: With an unexpected sudden recovery in Irish economic prospects in the lead up to the general election, Fianna Fáil’s support levels improve dramatically over a very short period of time, motivating the party faithful while demoralising the opposition who are left wondering if they will ever manage to get Fianna Fáil out of power. The reinvigorated Fianna Fáil machine manages to capture all the kudos from the resurgence in government popularity, with the Greens lacking the political nous to likewise capitalize, and a strong campaign sees the party’s support levels returning to the levels enjoyed in 2002 and 2007. While the Greens face into the political wilderness, with few or no Dáil deputies, Fianna Fáil is able to form a new government with support from independents and/or Sinn Féin. Fine Gael and Labour are left stunned by yet another electoral reverse, especially after having enjoyed a massive mid-term lead in the polls, and the prospect of permanent Fianna Fáil government starts to look very, very real.

Likelihood: This scenario looks about as likely as a Laois All-Ireland win at the moment, but remember that Fianna Fáil also experienced a mid-term slump in popularity and a bad local/European elections (albeit not to the levels experienced in 2009) during the lifetime of the last government, but ended up winning almost the same level of support in the subsequent general election (2007) that they did in the 2002 General Election. There are two rules to observe here. The first is that most governments experience a loss of support in mid-term, second-order elections (such as local and European elections in Ireland/the UK, or Senate/Congressional elections in the USA) before gaining support again at the following general election. Based on this rule, some degree of a resurgence in Fianna Fáil support in 2011/2012 is likely and the election may ultimately boil down to how skillful the Fine Gael and Labour leadership is in facing/resisting this. The second rule of thumb is the “it’s the economy stupid” and the fact that government survival at general elections ultimately depends on the state of the economy – in which case, a persistently weak Irish economy over the next two or three years will leave Fianna Fáil with little prospect of retaining power, although their support levels will probably recover somewhat relative to their current low ratings.

(A post containing a geographcial perspective on the next general election contest can now be viewed on the companion NUIM Geography’s Eye On The World blog.)

Update: Do great minds think alike? This blog posting proved to be very similar in tone to a piece in this week’s (Sunday, February 14) Sunday Tribune!!!

Adrian Kavanagh

 

 

Electoral Politics in the NAMA Era 1: When will the next general election take place?

The shape of the social, economic and political landscape of NAMA Ireland will be strongly determined by the parties who hold power over the next decade, and in particular by the new government that emerges after the next general election. But when will this election take place? After much speculation of a likely Autumn 2009 in the wake of the potential collapse of the current Fianna Fáil/Green Party/Others government, the government actually managed to survive the three major stumbling blocks that many believed could bring it down – the Fianna Fáil-Green Party renewal of the programme for government negotiations, the NAMA legislation and the December 2009 Budget. It now looks likely that the government will stay in power for the next few years, barring a series of by-election losses. One scenario could envisage an unpopular ‘zombie’ government clinging to power for as long as possible and running the full 5-year term until late May 2012/early June 2012 – another scenario could see a resurgence in popularity for the government with an improving economy leading to the government parties deciding to stay in power for a long as possible to benefit from this, thus running the full 5-year term until late May 2012/early June 2012. So…a Summer 2012 general election is a virtual certainty then? Hmm…

There is one fly in the ointment and that relates to the timing of the next Constituency Commission report. Recently the process of redrawing electoral boundaries for general (and European!) elections has tended to commence immediately after the publication of the definitive population by area census figures (26 April 2007 in the case of the 2006 Census) with the Commission being required to present its report no later than six months after its establishment (the last Commission publishing its report on 23 October 2007, less than five months after the 2007 General Election had taken place). In the wake of the McGrath/Murphy/Molloy High Court case of June 2007, however, the 2009 Electoral Act now stipulates that the process of establishing a new Constituency Commission should commence after the provisional census population by area figures are published – probably in October 2011 in the case of the next Commission – with the Commission being able to carry out its work of revising electoral boundaries during this period and then publish its report once the definitive census population by area figures are released some time in Spring 2012, and some months ahead of a potential Summer 2012. This does not mean that politicians would be fighting the next general election on the basis of newly redrawn electoral boundaries – a nightmare scenario for political parties which would require them to restart the process of candidate selection in some constituencies and for candidates who might find their political base torn asunder by an unfavourable boundary change and without sufficient time to build up new support bases within a new constituency – it can take many months of debate in Dáil and Seanad Éireann for a new Constituency Commission report to be officially ratified. But the government may not wish to fight the election in an ambiguous scenario where the electoral boundaries for the following general election have been published and dark, albeit unfair, murmurings about “gerrymandering” and “cheating” pervade on the part of candidates and parties whose electoral prospects would be significantly improved by the recommendations of this 2012 Constituency Commission report – possibly feeding in to residual anti-government feeling. Based on this, I think a February 2012 date might be a good bet for when the next general election is to be held – a date by which the government junior partners, the Green Party, may also feel that they have achieved as much as they are likely to from their participation in government and pull out in an attempt to distance themselves from Fianna Fáil.

Adrian Kavanagh

 

Plugd out of the city: Indie institution to close in Cork

Just a couple of weeks after the closure of the Kino cinema it’s more bad news for all things good in Cork.  Plugd, the city’s only remaining independent record store, community hub, and general drop-in centre for music addicts of all sorts is closing down in its current location after Christmas.

Plugd Records Cork on Culture Night 2009 (Photo by Barry Walsh)

Run by Jim and Albert, two extremely dedicated, knowledgeable and affable individuals, Plugd does not provide for its patrons only a place to buy music unavailable in the mainstream shops but an invaluable resource for information, events promotion, community building, and a space for local artists and groups to sell their records and develop their craft.

In a post announcing the closure on the People’s Republic of Cork forum last week, owner Jim suggests that “…it has become increasingly obvious over the last while that things are not working out in our current situation…The reasons are straight forward enough – business is down, like most others at the moment – and overheads are staying up”.  Although there is some hope Plugd will reopen in a new location, the store will soon cease to exist in 4A Washington Street where it has traded for eight years.  As the heartfelt comments from customers and Corkonians past and present testify, the absence of Plugd will leave an undeniable dent in people’s cultural and emotional experience of the city.

I think that this closure obliquely hits on recurring themes on this blog.  As the recent budget exemplified, the priority of the Government has been to invest in keeping the property sector artificially inflated and ensuring that banks, corporations, and high earners aren’t scared away from these shores, at the expense of everyone outside of these vested interests.  To put it another way, it’s business as usual for the apparatus of the state.

Brian Lenihan has suggested that NAMA is meant to free-up banking capital in order to offer loans to small enterprises, but if land prices and therefore commercial rents are kept inordinately high many of these businesses are precluded from making a profit anyway.  Moreover, the freeing up of domestic capital was never the aim of NAMA.  In the meantime, Cork loses another highly valuable cultural resource.  The myopic focus on boosting the commercial property market has invariably pushed up commercial rates, to the extent that it is mostly the larger chains that can afford the rents in city centre locations.  Thus, the perpetuation of a bland urban monoscape of shopping centres, franchised restaurants, and cafés.  Places like Plugd may disappear in the midst of this more noticeable transformation of the urban streetscape, but in the prophetic words of the folk singer Elizabeth Cotten:

You’re gonna miss the songs I play
You’re gonna miss me every day
Friends I know you’re gonna miss me when I’m gone.

Cian O’ Callaghan

 

Known unknowns 1: Economic growth during Nama’s lifespan?

One of the major ‘known unknowns’ about Ireland after Nama is whether there will be any economic growth in the country during Nama’s lifespan. And such growth is needed if property prices are to rise 10% in ten years. There are many reasons for pessimism here. The U.S. capitalist economy isn’t exactly surging back to life. And even if it does, the U.S. is so riddled with debt that any recovery won’t necessarily mean demand for services or good produced in Ireland. China, to which many commentators look for signs of a global recovery, is too export-dependent and too dominated by its coastal elites to lay the conditions for a much-needed boost in demand from its rural sector – a source of demand that was critical to the success of other Asian NICs (that is, ‘success’ as measured by surging economic growth rates, if not in equality).

So, if not from resurgent growth in the U.S. or China, just how will the anticipated recovery occur? Or, is there some other reason to be cheerful? Might it be that Ireland’s European partners offer succour here? Are we on the verge of a new period in Ireland’s economic relationship with Europe? Or, as lots of people in the country expect, is Ireland just on the verge of a sustained downturn / fully-fledged long term crisis? If the latter, how can Nama expect to return a profit to Irish taxpayers? And if it will make a loss, just how much of a loss, year-on-year, are we looking at? And precisely which sectors of Irish society are going to have to pay for those losses?

Alistair Fraser