Review of Ship of Fools by Fintan O’Toole (Faber and Faber, 2009)

Fintan O’Toole is one Ireland’s best known social and economic commentators and cultural critics, and Deputy Editor of the Irish Times. Never shy about airing his views, he doesn’t pull his punches in telling it as he sees it, and in Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger he provides a damning critique of both the Celtic Tiger model of development and the Fianna Fail (and coalition partners) government since 1997. Rather than focus on one particular aspect of the present crisis – as with The Builders or Banksters – O’Toole provides a broad sided polemic on how Ireland went from bust to boom and back again in a twenty year period.

Written in a clear, engaging prose that is often angry and sometimes witty, he makes a compelling case that Ireland has experienced an acute case of crony capitalism – that is, the Irish government rather than steering the ship for the benefit of all its crew, became the vehicle for capital accumulation for the small group of friends milling about on the bridge. Indeed, it is telling that the book starts with two shipping anecdotes – one about the Sean Dunne’s (a developer) wedding to which high profile developers, bankers and politicians were invited for a two week Mediterranean cruise on board the yacht Christina O, owned since 2000 by an Irish consortium who wrote off up to two thirds of the €65 million cost against tax; the second about the Irish national yacht, the Ashgard II, which sank in September 2008 and which remains on the sea bed with little hope of salvage or replacement. The book consists of nine polemical essays, each focusing on a particular theme that together provide an overview of why Ireland finds itself in the mess it’s in.

The first chapter takes to task the notion that Ireland ever had a planned and coherent model of economic development (which it has recently been selling to every other wannabe developed nation), but rather was the beneficiary of a series of fortunate events largely outside of its control (such as the general, huge overseas expansion of US capital, structural funds from Europe, English language competence, social partnership, access to European markets, Northern Ireland peace process, etc), aided by lax regulation and a tax regime which enabled the attraction of significant foreign direct investment. Rather the narrative of economic development happened after the fact to explain Ireland’s catching up with other advanced economies, rather than forging ahead. And it was an economic model that had two fatal flaws: it only worked if there was sustained growth, and in O’Toole’s terms it was driven by stupidity and corruption that meant it became dangerous overheated so that collapse was inevitable. Simply put the economic model was geared towards over-extending ordinary citizens and over-rewarding those that were already wealthy.

The stupidity was the policy decisions of government and the head-in-the-sand approach to fiscal management and regulation, and the corruption was the blatant use of the state system for the benefit of high powered Fianna Fail supporters, the very close ties between business and state (particularly in the banking and property development sectors), and the general lack of accountability, transparency and prosecution of those defrauding the state (the focus of chapter 2). This corruption was powerful because it not only worked on a system of bribes but it: 1) fostered a sense of insider and outsider, wherein all other interested parties knew they had to participate to maintain competitive advantage (if one stock broker paid a bribe, they all had to to their maintain access to decision makers); 2) was largely condoned by the both the public sector regulators and the general public; 3) there was a culture of impunity wherein nobody was ever prosecuted for corruption and what is more if their corruption was ever exposed they maintained their access to power. In other words, corruption was allowed to flourish, and even now in the depths of the crisis it is still at work – for example in relation to how the banks have been bailed out, especially Anglo-Irish, and the setting up of NAMA protects the interests of high powered friends of Fianna Fail.

The vast majority of the electorate, he argues, let this happen because corruption, self-interest and self-duplicity and denial are embedded into Irish society. Low-level corruption, such as DIRT evasion or social welfare fraud, was widespread. Moreover, lots of people did well out of the boom with rising salaries, home equity, and small business growth. The politicians might have been corrupt, but many people were the beneficiaries. And if all politicians are corrupt, why wouldn’t you re-elect one that you knew to be so (because a tribunal had exposed them)? As long as they served local needs, they were welcome to skim a bit off the top.

In turn, he writes about the banking system, financial regulation and tax evasion; property development and the new class of super-wealthy; land speculation and development tax incentives; Ireland’s role in global financial markets and the crash; the failure to future proof Ireland for the next phase of development with respect to education, information communications infrastructure, and key transport and energy infrastructure; and the ad hoc approach to addressing the crisis once it appeared that seemingly had more to do with protecting self-interests than the national interest.

Central to O’Toole’s analysis is the notion that Ireland is not yet democratically mature, with a weak civic morality and underdeveloped system of political governance, and an electoral system that encourages and condones local clientelism and corruption. He suggests that Ireland failed to create a proper democratic republic, to go through a process of political and social reform, the establishment a strong welfare system and collective interest, and to create a state independent of Church and local interest, as in other post World War Two, European countries. Instead Ireland persisted with two, essentially ideologically barren, middle right parties that were for all intents and purposes identical and which used a form of machine politics that were highly clientalist, reactionary and short-termist.

For him, the Celtic Tiger represented an opportunity to lay the foundation for long term economic prosperity, but it was squandered by a political party more interested in short term economic gain for a small elite. The solution is to complete the democratic project in Ireland through a radical overhaul of our political system and consciousness. This means in the short term the election of a party with a radically alternative vision to Fianna Fail, and in the long term the establishment of a ‘second Republic’ with reform of the Irish electoral system, reform of the tax system, and systematic tackling of political and economic corruption accompanied by much stronger modes of governance and regulation

Overall, O’Toole’s analysis is compelling. The first half of the book is a lucid, tour de force polemic. The second half is more patchy in its argument and content, and its focus drifts a little. The book is driven by strong observational analysis, and to my mind could have benefited from some explanatory frameworks derived from the social sciences, particularly political science. There has, for example, been a debate between social scientists in Ireland as to the extent to which Ireland is a developmental state. It would have also been nice to have some comparative analysis that placed Ireland – economically, politically and socially - in relation to other European nations. Personally, I felt the conclusion also needed further elaboration on what needed to change and why, using examples from elsewhere, to really push the point home. Nevertheless, it’s a fine piece of work that will no doubt be popular reading for many people in Ireland keen to understand the rise and fall of the Celtic Tiger. I’ve already recommended it to a number of people.