Powerless Taoiseach at mercy of third parties

Brian Cowen is now as beholden to Brian Lenihan as Bertie Ahern once was to Cowen, writes Vincent Browne.

BRIAN COWEN has lost power already, if he ever had power. He is the creature of three entities and his fate depends on them. Regrettably, our fate depends on some of them too. Or rather we think our fate depends on them too and that cognitive distortion may be our real problem.

Were Brian Lenihan to utter a word of reserve in public about Brian Cowen, he is gone. He is as beholden to Brian Lenihan as Bertie Ahern was beholden to him in Bertie’s last days.

Brian Cowen is a creature also of Patrick Honohan. If anyone here has real power it is Honohan, the governor of the Central Bank. He is unfireable. He can say anything he wishes, no matter how critical of Government policy, and not alone can the Government not fire him, they have to do as he says, for if they don’t – it’s curtains. For Patrick Honohan has cred. Cred with the international financial markets.

On Monday, Honohan laid it out, not quite in simple terms. He is handicapped in the communications area, not by any hoarseness but by a perhaps greater disability: the academia virus.

But we got the message on Monday: we need certainty fast about the bank bailout and about how the Government plans to deal with the hole in the public finances. The complicated bit was when he said the plan for reducing the deficit needs “explicit reprogramming”, which could mean either that the scale of the “adjustment” that needs to be made in the December budget needs to be even greater than €3 billion or we need a longer time frame than 2014 to get our act together.

But, one way or another, Brian Cowen and Brian Lenihan better get their act together and do what Patrick Honohan tells them to do and come up with a plan that is acceptable to the real holder of power – international finance.

It is the international financial markets that are the real boss here, at least within the perspective we operate. Yesterday morning the National Treasury Management Agency (NTMA) sold €1.5 billion of bonds (loans to the State) at an interest rate of 6.023 per cent. Citigroup’s chief economist Willem Buiter said the bond auction was “great” for investors and “horrible” for taxpayers and the Government.

How could we have got ourselves into a situation whereby society’s interests are subordinated to the interests of international capital? The immediate answer is because of the incompetence and pusillanimity of our Government. They undermined the tax base by favouring domestic private wealth in the Celtic Tiger era and they deferred too much to international capital via the blanket bank bailout. And it now transpires that international capital is none too impressed by the scale of that obsequious deference and thinks we are bunched as a consequence.

And the really depressing aspect to all this is that when this crowd in office (we should no longer fool ourselves by the pretence that the Government is in power) are given their P45s, the alternative crowd will be little better. Not that they won’t be more competent (how could they be less competent?) or that the spectacle of the present crowd skulking off into well-earned anonymity won’t be gratifying. But that the new crowd will be hooked on the same mindset; no option but to persist now with the bank bailout, whatever the cost; no option but to correct the deficit as we are ordered, at whatever cost; no option but to devastate public services and welfare, at whatever cost.

There is a phenomenon known as hegemony, which means the prevailing mindset. The prevailing hegemony used to ordain at one time that slavery was okay. It was once believed that the universal franchise would result in mob rule. Until recently we thought in this country that the institutional subordination of women was the natural order of things.

The current hegemony ordains that the subordination of a large section of the population through the unequal distribution of wealth, income, power, status and influence is okay too, is the natural order of things.

A few weeks ago the CSO published Measuring Ireland’s Progress 2009 . It showed: “Despite the drop in GDP (in 2009) Ireland still has the second highest GDP per capita in the EU 27, expressed in terms of purchasing power standards. GDP in Ireland increased from 44 per cent above the EU 27 average in 2005 to 48 per above in 2007, falling back to 31 per cent in 2009.

The pattern of GNI (Gross National Income) in Ireland is similar; it rose from 24 per cent above the EU 27 average in 2005 to 28 per cent above in 2007, falling back to 9 per cent (above) in 2009”.

We are a rich country, one of the richest in the world. Our problem is in how wealth and income are distributed. And it is our failure to appreciate this and act on it that is our fundamental problem.