The language of recovery
Eóin Ó Murchú examines the problems with framing the national economy in the medical terminology of recovery.
In moments of disaster and crash, people seek stability. The language of the ruling class, however, often creates a facade of stability, and masks a continuing crisis. In recent months it has been hard to ignore the talk about the recovery we are experiencing here in Ireland.
Recovery is an interesting term. Medically it refers to returning to a healthy state. Its use may be traced back to 30 September 2008, 15 days after the collapse of Lehman Brothers. An emergency meeting was convened between senior political figures and banking directors. The contagion from the American subprime loan crisis was cascading towards Europe and talk of the “boom getting boomier” all but vanished. The prescription received that night was to offer a complete blanket guarantee to the banking sector. This move served to inoculate financial interests from excessive risk. As a result, ten times the national debt and more than twice the value of the economy was shovelled from the private to the public sector. Since then, the country has received bailout funds in exchange for austerity and structural reforms.
To continue this medical metaphor, the financial sector received an emergency transfusion from the taxpayer to guarantee the country’s credit ratings. The narrative constructed was “we are all in this together”. We needed to tighten our belts, and if we kept to the Troika’s orders we would come out the other side, healthy. Nearly eight years have passed since then and there is an election on our doorstep. Those in power are heralding the return of prosperity thanks to the medicine of austerity. The message is clear: we are recovering. But for whom exactly is this diagnosis made?
One of the metrics often used to gauge recovery is Gross Domestic Product. GDP is perhaps the blue-ribbon metric for growth. It gives a good indication of the net direction of economic activity. However, the associated mantra that a stronger economy results in a fairer society, which we now hear repeated across many European centre and centre-right parties, is a fallacy. GDP fails to take into account the daily life of an everyday citizen. Fears and aspirations, which can dominate a person’s entire perspective are omitted from this crude metric on which has been bestowed the authority to conclude: recovery. Income inequality isn’t measured, and its toxic effects are glazed over. Socioeconomic rifts open, catalysing a sense of otherness and division. Gentrification, or socially stratified urban spaces have already sprung from Ireland’s recovery, and gated communities separate the upwardly mobile from communities who’ve managed to miss this rising tide.
Another flaw with using GDP is that it tells you nothing about the hidden costs which cannot be so easily measured. A country may fell a thousand hectares of forest and boost its GDP, but no financial report will catalogue the impact of the environmental devastation. The same can be said about the economic surge taking place due to cheap oil. To complement GDP, GNP (Gross National Product) can be added to the economic armamentarium. GNP takes into consideration the repatriation of profits declared in Ireland by multinationals. This would be an insightful figure to include in an Irish discussion, considering our predilection for foreign direct investment. Thanks to the Central Bank, we now know that goods produced abroad but owned by an Irish entity can be classified as exports despite never touching Irish hands or Irish soil.
To restrict ourselves to a single number as the sole barometer for economic recovery is both short-sighted and dangerous. This treats the nation as one body with one recovery, rather than the interaction of many bodies and many recoveries. If we accept the economy as one entity, growth will always be welcomed as beneficial. However, countries contain more than their economies. They are not only factories, shops, and the stock market; they are nuanced, complex societies wherein cultural, spiritual, moral, and personal webs of life are interwoven.
The Socratic method of reasoning or even palliative care medicine weren’t developed out of desire for profit, but out of curiosity and compassion. However, no leading business executive would deny the benefits of critical thinking, nor would any healthcare trustee ignore the savings palliative care can yield. It is clear that the fetishisation of immediate growth can preclude future growth. The paradoxical nature of this short-term growth trade-off highlights the recovery narrative’s internal contradiction. A more honest metric for growth, or health, would be vigilant to the basic needs and cultural development of all individuals, even if the larger economy is thriving
Another question arises in our discussion of growth and recovery. To what can we attribute the taking of our medicine? Expansive cuts to the societal safety net of welfare have been deemed inevitable to balance the books and make the country stable. In a fiscal act of bloodletting, we have been afflicted with austerity in an effort to streamline our economy and allow it to grow. Like traditional bloodletting, however, there is a risk that it may do more harm than good. The IMF, along with many well-regarded and conservative economists, has started to publish papers questioning the economic benefits of austerity. What, however, is the cause of Ireland’s growth if not the prolonged belt-tightening exercises? Looking at Ireland’s economic history, state-subsidised foreign investment has been preferred over cultivating indigenous industry. To this day, Ireland exports not manufactured goods, but financial and high-tech services to the global market. Indeed, the growth from such multinationals is bloated due to Ireland’s status as a tax haven, but job growth is present. From 2008-2013 nearly 10,000 high-wage, high-tech jobs in the ICT sector have come to Ireland, with this trend undeniably benefiting from quantitative easing in the United States.
It is critical to observe that this increased investment has nothing to do with the fiscal bloodletting of Transylvanian excess. It is the direct effect of a state-led strategy to attract global capital. This policy has a long tradition in Irish politics, dating back to the 1960s and helps explain how we have come out of our recession in contrast to Greece. The idea that we have made adult choices and dutifully taken our medicine belies the truth behind our ability to provide a ready-made niche accommodating foreign capital’s global supply chains. The eurozone and, to a lesser degree, any incumbent political party has little to do with it.
The disturbing premise of this recovery narrative is the idea of never-ending growth. By mimicking Bram Stoker’s Dracula the quest for growth becomes inhumane and relentless. A recovery, or return to stability, should end. Medically, things that grow uncontrollably are pathological. If we constantly need to grow and compete, then we prescribe to ourselves a constant justification the medicine of austerity. By idolising the language of growth, failing to recognise the casualties of that growth, and continuing to measure Ireland’s recovery with such crude metrics, we will always hold passports as citizens of an ill country.
Latest posts by Eoin Ó Murchú (see all)
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- A prescription for our ailing two-tier health system - April 6, 2016
- The language of recovery - February 18, 2016