What’s the worst that could happen?

 
 

Amid the strange happenings of a turbulent world, Stephen Boyle recalls the triumphs and failures of the Progressive Democrats.

It seems that as if Ireland has become the scene of some sort of Monty Python sketch in recent weeks, seesawing between good and bad news on an almost daily basis. Bank stocks tanked, but then recovered resurgently in the largest surge the Irish stock exchange has ever seen. The national pay talks seemed doomed to failure, but a last-minute compromise was reached begrudgingly by all sides.

In the midst of all this, one of the smallest but most influential political parties of the last twenty years, the Progressive Democrats, delayed the inevitable decision to switch off their life support machine until a larger meeting of the party next month. It has certainly been a tumultuous few weeks, and one that could shape events in the country for years to come.

On the financial side, the pay deal will hopefully have re-assured foreign and domestic investors alike that they will not have to deal with wide-scale union actions in the next couple of years. Although employees are sensibly worried about falling real income, to have demanded too much money would have risked the fate that befell the Italian airline Alitalia’s workers this week, whose pay demands were not met, and instead lost their jobs.

Employers may have had to pay a little more than they wanted, but were willing to exchange that for stability. Dissatisfaction is probably indicative of a good deal for the country. There are those who believe that such agreements distort the marketplace and should be discouraged as such. However, a spate of strikes in the current climate would have heaped further misery on our already substantial economic woes.

Indeed, it seemed last week as if the entire system of financial capitalism had begun to collapse. The faith that many have shown in light regulation as a driver of economic growth has been called seriously into question.

With financial stocks plummeting early in the week, people began to worry that an Irish bank might go the same way as one of the American ones. It is unheard of in recent memory, but on Friday, the Minister for Finance, Brian Lenihan, was urging people not to withdraw their savings from Irish banks.

The financial regulator stepped in to stop short-selling of financial stocks during the week. Normally a legitimate tool, shortselling involves betting that a stock price will go down. Many firms use it as an insurance policy, like airlines, so even if oil prices go down from the level they bought at, they have a way of making their money back.

With bank stocks, there is a suspicion that people were deliberately causing the price of Irish banks’ shares to fall in order to make a profit, so the regulator sensibly chose to prevent the practice for the next three months.

It is in some ways fitting that the Progressive Democrats, the most economically liberal party in Ireland, began to wind down their own operations against this backdrop. The ‘meat in the sandwich’ of recent governments, as the former Minister for Justice Michael McDowell described them, has begun to reek rather a lot of late.

As noted by smug opponents and fans of statistics, their entire polling support going into the last general election was within the margin for error, and their actual showing of four seats wasn’t much better. When their party leader became somebody that most of the voting public hadn’t even heard of, it became clear that they had passed their sell by date.

Both the PDs’ greatest success and greatest failure is that they changed Irish politics. Their policy of supporting low corporate tax rates, which was initially met with widespread scepticism, has become main-stream. Few could have foreseen a decade ago that left-wing parties would be arguing against an EU treaty on the basis that Ireland might be forced to take a larger share of company’s profits, but that
is exactly what came to pass during the Lisbon Treaty campaign.

None the less, it was the PDs’ failure to draw in widespread support for themselves on the back of these policies that ultimately doomed them to failure. Microsoft were famous in their early days for taking good ideas that smaller software companies had, and incorporating them into Windows. The larger Irish political parties have done the exact same with the PDs policy ideas. Fianna Fáil are the most obvious example of this phenomenon. While the PDs began as a fractured fringe element within the party, their views have since become close to accepted orthodoxy.

Indeed during the boom years the Minister for Finance, Charlie McCreevey was considered almost more of a PD than the PDs themselves. With their main ideas becoming orthodoxy, they turned to a more aggressive stance on issues such as law and order which did not sit so well with the Irish voters. As a party, the Progressive Democrats were born during the last economics crisis of the 1980s. It seems after a tumultuous week that they have not survived the next.

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