The Irish Economic System has Installed a Poverty Trap
As it has been written about extensively in other articles I have written on the state of Waterford city and county, as well as systemic and infrastructural neglect across the country for decades, I fear that this is just going to be another article of me repeating the drum banging for the sake of repeating the drum banging to increase word count.
I am getting tired of finding new ways to articulate the same old problems. The difference with this piece is that we have just officially come out of quarantine restrictions. With this in mind, please remember that the joy and jubilation you feel from obtaining old freedoms once more should not be used as a veil to blind you to the issues that COVID has brought to light, from our basic infrastructural necessities to our pitiful excuses of political leaderships, both in government and in opposition.
COVID aside, articles like this seem to be an increasing reinforcement of habitual tendencies to highlight to obvious neglect. When it comes to writing, I am going down and unfortunately exhibiting more and more pessimistic observations, especially pertaining to Waterford, as there are issues that have not been addressed, issues that are used as political leverage in attempts to shore up votes, and it’s these issues that will not be rectified unless under massive duress.
Where we are in the political timeline is seeing hubris trump social responsibility and public service. This is due to a variety of different factors that see a shunning of responsibility, but want to be still be paid to keep the wheels spinning. An example of such wheel spinning would be in the useless yet financially lucrative SPC membership of low level public governance. I say with confidence that these memberships and special committees (the aforementioned SPC’s) have done next to nothing for progress as proof is usually in the pudding, and the pudding, not just in Waterford but around the majority of the country, is just not there. Even though it matters for the context I am writing about now, that is a deep discussion for another day as we are going to focus on poverty trap installment.
A walk through Waterford city center or even the beautiful towns of Ireland will see urban degradation, and this was even before the pandemic hit. There are huge failures from institutionalised politicians across all sections of the political spectrum, top level civil and public servants that are paid massive amounts of money to run public/civic sectors but who get awed at the conversion of a word doc into a PDF file, and resources hoarders of the local area golden circle elites that have a boot on the neck of local economies to satiate their oligopolistic tendencies and greed. It are these factors along with many more that prevent progress and have put much of Ireland, especially my home city of Waterford, into what can be described as nothing less than a poverty trap.
There are many factors that contribute to the creation of a poverty trap. Some of these factors are;
Limited access to credit and capital markets which means no stock exchange or fair capital gains tax on returns for the person who wishes to invest, so they put money into investment housing, banks refusing to grant loans so the pay day lenders/loan sharks come in to fill that need at extortionate interest rates, or banks leaving the Irish market or be liquidated with loan books sold off condensing the pool of market players and competition.
Extreme environmental degradation which sees agricultural and aquaculture production potential drop.
Corrupt governance which has been highlighted in such news like the Catherine Zappone job in America, Golfgate, and the ongoing financial hole that is the Children’s Hospital.
Capital flight but looking internally we can see this with the Dublin centralisation project.
Poor education systems that will stem from such educational downgrades as the asset stripping project in the form of TUSE when it comes to Waterford and it’s third level education system.
Disease ecology being super prevalent and present with COVID. Other disease impacts can be seen with Bird Flu, Swine Flu, or Foot and Mouth.
Lack of public health care which saw the downgrade of Waterford Regional to a UCC medical campus hospital.
War which might make a comeback with a Sinn Fein government for old time sakes as old habits tend to die hard.
Lastly for now, the poor public infrastructure with examples being Waterford Airport, Waterford Hospital, WIT, and the North Quays coming to mind.
Out of interest, how many of the above points does your government hit? So what is a poverty trap and why has there not been a single talking point about this being the Ireland of today in any sort of media?
What is the Poverty Trap
Quiet simply, a poverty trap is a mechanism that has been placed in an economic system which makes it very difficult for people to escape poverty. So when a significant amount of capital is needed in order to escape poverty, this “start up capital” makes it next to impossible to become a properly productive members of society by making it harder to acquire capital and thus creating a self-reinforcing cycle of poverty.
Now, I do understand and believe that overall wealth has increased for society and I would rather live in today’s society instead of back in the dark ages, but with how the old version of capitalism that has given us so much comfort and better standards of living has been allowed to mutate into a repulsive neoliberal playground, the end product has been a much wider and widening wealth gap between haves and have-nots. However as I postulated and put forward in a previous piece ‘The Game is Rigged‘ we must not allow price, wealth, and value be observed as the same thing.
Neoliberalism has a place in economic practice, but when governments use this practice in every aspect of society, they are enacting such practice which is supposed to run with the aim of being efficient. We can see here in Ireland that it does the opposite as it only lines the pockets of friends of those that have been publically elected who run these companies with obvious kickbacks, relinquishes control and responsibility of politicians to allow them justify inaction and still get paid huge money for less responsibility, it helps in promoting oligopoly or monopolistic market traits for these government ordained firms and thus takes tax payer funds to finance inefficiency and destroy national utilities. It is this practice of weaponised neoliberalism and government assurance of bailout (not buy out) in the case of inevitable failure that has allowed public resources be squandered in the running of these companies. Such companies will go on to hire disgraced/retired politicians as advisors who have now established another avenue of taking monies from the public coffers. This all goes towards the poverty trap cycle we are finding ourselves in right now.
As we have talked about some of the factors in the previous paragraphs, lets dive a little deeper and get more specific with regards to Ireland, and obviously my neglected home, Waterford.
Irish Specific Poverty Trap Factors
Interventionist policy: tax for the sake of tax is the low hanging fruit of attempting to fix a problem, knowing full well that its just a plaster on a cracked water dam. Pretending to fix a problem is something that would fly with the past generations but not any more, as it just kicks the can down the road and the burden shoulder by the upcoming generations. Such pitiful excuses on over-taxation and under-representation of the current tax system can be seen in the rising cost of fuel, housing, food, and alcohol, being pushed onto an already squeezed customer/population. A much needed revision of the convoluted and parasitic tax system is needed to ensure proper procurement measures, updated budget practices, and a modernised tax system which can be found in the following articles; Tax 1 and Tax 2
Inflation: The knock on effect of interventionist policies is giving rise to prices due to market price absorption. A perfect example of this is in help to buy/rent schemes that see government subsidies for the likes of first time buyers be announced which then immediately get absorbed into the price of a house. It looks good in a PR sense, but a house that should be 190,000eur is now into the 200,000 price range. This practice is not even taking into account the lack of investment/redeployment in public housing that is needed to add supply to a supercharged demand market right now. There are other factors that are out of the control of government and opposition control like the global supply chain problem, but we need to focus on things we can control and to help establish domestic industry affected horizontal and vertical supply chain issues. An article on such problems with inflation can be found in the following; Weimar Republic of Ireland.
Crime being Observed to Pay: On the back of inflation and just wrong policy implementation, a lot of people have turned to crime, and I can see a lot more turning to it, as a way to make ends meet. It’s a sad state of affairs, but what choice do people have when the world is being more brutal to live in? As crime is now synonymous with drugs, the use of drugs will also increase as a coping mechanism for an ever isolated and neglected society. I have written about crime, it’s impact, and the idiocy of it in the following article; The Outlaw Fallacy. I have also written about drugs in the following articles; Drugs 1 and Drugs 2.
Infrastructural Investment Neglection: You really get what you sow, and the lack of future proofing seed sowing done by consecutive governments for the last two decades is proof in that statement. Making the money in people’s pockets less valuable, forcing them to decide on should we have heat in the house, fuel in the car, rent paid for the month, or food on the table is nothing short of a bleak Dickensian nightmare born of contempt and ineptitude for the people. This is now being showcased fervently in a surge of support for the equally as useless but not yet tested Sinn Fein party. Such support is not stemming from good policy or belief in their people. It is stemming from a rejection of current government. The lack of actual infrastructure investment, mainly outside of Dublin and Cork, are long term political ploys to hang above the general population through to election time as a carrot in front of a horse, but now the horse is fed up and ready to kick the carrot holder square in the jaw. This kick in the jaw is going to come from an ever flirtatious stance with establishment politics coming from Sinn Fein, more of this can be read in the following article; Antiestablishment turning into establishment.
Civil and Public Service Reform: The fish rots from the head, and when the head hasn’t got a clue about what is going on or more likely doesn’t care, about those in the trenches of keeping the country moving, then the low level workers to middle management are left sort out the excrement that rolls down hill. The solution to problems is to usually throw money at it, which leads to nothing more that a severely bloated department that is tied down in bureaucratic red tape while hemorrhaging taxpayer money. A simple look at the Dept. of Social Protection and the PUP payment is all that is needed. There are people now living outside the country in receipt of such payments. The lack of enforcement, check ups on recipients who have leeched the system, and penalties on those who are committing fraud by working and continuing their receipt of social payment, while also committing perjury in declaring false info when asked to the Department is rife and not being investigated. The HSE is another Department being held back by a bloated admin staff, which is clearly not working based on how hospitals are operating now, when money should go towards better doctor and nurse pay and numbers, as well as new policy for better work life balance like they have in Germany.
Irish Economic Centralisation and One Size Fits All Failure: Centralisation of the economy to the capital has been nothing but detrimental to the rest of the country, maybe with the exclusion of Cork. Everything from the majority of jobs being created, the HQ for European operations of global companies, and all tax payer spending has mostly all been Dublin based. They never experienced the 2008 recession like is what is ongoing in many parts of the country, and the focus on the capital has seen Victorian era London like migration of people in Ireland to Dublin without the proper planning and investment to accommodate this migration. Such an influx and penchant of those already up there for NIMBYism to accommodate this influx of people is holding back proper market equilibrium in pricing set from demand and supply thus artificially inflating pricing from those migrating to the capital.
Overwork and the Great Resignation: Karoshi and the great resignation is seeing people get fed up with overwork for little pay. Karoshi is the Japanese word for “death by work” which is seeing jobs killing people or taking years off their life, so the great resignation of jobs of 2020, 2021, and what will continue into 2022 is not a surprise. The balance between employer and worker needs to be found through means such as unions and legislation without overcorrection or killing off the entrepreneurial spirits of sole traders and innovators.
Political one-man-up-ship: It is immensely evident that party flags are being flown as priority over that of the national flag. The Oireachtas members would prefer to get in line with as a pocket lining yes man for the party leader in the hopes of getting additional bonuses to the wages through committees and positions, all at the expense of the taxpayer and the constituents. The overview of salaries and allowances for Oireachtas members can be found here. Remember that the person knocking on you door looking to retain a seat is earning 100,000euro plus allowances and expenses. Keep that in mind when choosing someone to elect, especially when inflation and interventionist policy like increasing tax is hitting you harder than it is them. They can claim the ever increasing price of petrol for expenses when going to work, you can not.
The Irish Poverty Trap
Based on everything that has been put forward so far in regards to Ireland being a poverty trap, if you can look me in the face and tell me that the points raised above are not true and do not add to more and more people being trapped in the ever widening vacuum of poverty , then you are someone who has; been fortunate enough to not ever need worry about having a roof over your head, the credit you have taken out will potentially be sold to a credit agency, and have benefited off of the poverty trap mechanism that were put in place by previous governments.
It’s all well and good to politically market yourself online with some good news here or there, but it is not good enough especially when you and your parties have left the majority of the country to die. Actions will always beat words, and currently the actions are doing one thing (fostering a poverty trap economy) while the words are saying another. The only thing sustaining you now is a bedrock of an institutionalised voter base who will not be around long enough or care about future generations to give up their political stubbornness and voting history because a councilor got someone a door fitted back in the 60’s.
This is the country we now have, a country built on promises and inaction over the last decade or two. Politicians who surround themselves with yes men who are educated but not intelligent and have no notions about what it’s like to be struggling to start off in making a life for themselves as either daddy got them a job or mammy knows someone from the tennis club. This paragraph comes off as exhibiting a severe amount of begrudgery and will be highlighted by those who have benefitted from the system to discredit such a statement, but considering how business is conducted in Ireland and how nepotism is rife, I’m sure it can be an observation of actualities instead.
This closed shop of excessive neoliberal policy to allow for political get rich quick schemes has left the vast majority of the Irish population at a point of returning to mud huts and serfdom. We have replaced foreign landlords with our own and have decided that is good enough, even though we are now coming over the hill and beginning our slow descent into the Irish made poverty trap.
This article is coming from a place within me that sees no bright future for myself when it comes to home ownership and starting a family. I’m being priced out of those necessities now turned luxuries. I am writing on behalf of a generation that is being used and abused, and expected to put up with this. This poverty trap installation is slowly radicalising the population and this is a scary thought as chaos is coming. especially to Waterford.
Neglect of Waterford, the Majority of the Country, and the Individual
Waterford and many places in Ireland have been neglected. To keep it personal, I will speak about Waterford but I’m sure the points are transferrable to where ever you reside. This neglect has led to an increase in low income jobs (yes jobs are great but you have people with Masters degrees and PhD’s only getting opportunity to work in call centers due to lack of opportunity to use their education or else leave for greener pastures causing brain drain), lack of infrastructural investment (WIT, Hospital, Airport), a rigged renters market, low savings, and debt increases just to cover rising cost of living. All of these factors see a well equipped workforce not be allowed to give back to their home community due to the widening of the vortex that is the poverty trap.
Personally, there is a constant ever going internal battle playing out in my head when it comes to career and making a home. I have been educated to a high degree and have a decade of work experience with massively transferrable skills, that joining the great Irish tradition of emigration for better opportunity is, as of now, front and center for me. This call of opportunity is also going to be the basis of questioning that I find myself answering for my situation, especially in Waterford, of circling the drain and falling in to the impending poverty trap set by decades of poor decision making and asset stripping exercises thanks to a more or less overall useless representation on the political side of things. The other side of me feels like if I do take off I am turning my back on my home and running away. This to me is not the best way to fix the problems here but allows for more understanding of what needs to be done. The trade off is leaving in the hope of acquiring resources to fix the problems here versus staying here, not amassing the resources to fix said problems, but knowing in such acute detail what is wrong and where it is going. Resource or knowledge? Both could be acquired here but there is no way to acquire both as of yet.
If you are running for election and can look the people of Waterford in the eye and say that there is no poverty cycle in the city, that there is no majority of low income jobs, low human capital due to no way to gain experience, skill, and no value placed upon the worker, low productivity as most work is no being found outside the county boundaries hence labour exoduses or brain drains, low savings due to increasing cost of living and low income jobs, low investment due to political neglect and not wanting to set up shop when Cork or Dublin are preferred, low economic growth due to population loss and lack of productivity, and a lowering of the education and health systems due to asset stripping measures; you should be figuratively tarred and feathered for being dishonest with the electorate and disassociated from reality.
To end on a brighter note, there have been some good positive moves for Waterford recently with being named best city to live, the only cleanest city out of the five in Ireland, the retention of rescue 117, and with some jobs allegedly coming here in customer service/call center form, but these small tokens do not make up the neglect and poverty trap policies we have had to endure the last decade or two.
About Author
Jonathan McEvoy is an Irish based border control post inspector for the Irish Government and Europe Union who took up his role in 2019 in response to British withdrawal of trade agreements, which was a position taken up after time spent working within the financial services sector in Dubai. He is an economics and finance postgraduate from Waterford Institute of Technology and a community stalwart in his home city of Waterford having been elected to serve on many boards of directors around the city in a voluntary capacity. His love of writing has a deep theme of economics in every published article which talk about history, philosophy, finance, politics, and society. His writings are grounded in practical observations away from the theoretical hypothesis of hypothetical potentials. If you are looking for a modern digestible viewpoint on modern economic ideas with a focus practicality and no holding back, he is a writer for you.
Find Jonathan on the social platforms @jonathanmcev0y
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