Last Friday, elections were held in Ireland. Fine Gael got 25.5%, Fianna Fáil, 24.3%, Sinn Féin, 13.8%, Labour 6.6%, the Anti Austerity Alliance 3.9%, the (new) Social Democrats 3%, the Greens 2.7% and a very large and very heterogeneous group of local independents get 18%. The big loser is Labour. The party loses 12.8% of the votes compared to 2011. The second biggest loser is Fine Gael (minus 10.6%). The big winners are Fianna Fáil (plus 6.9%), Sinn Féin (plus 3.9%), the Social Democrats (3.0%) and the Independent Alliance (4.2%).

Labour was expected to lose – polls have been predicting big losses for years. Yet, the Labour top never made any effort to readjust. It seemed to be insulated from reality. With the election gone, the party blames the management of the campaign, as if the biggest loss that the party ever suffered is due to public relations, bad communication and poor choices of candidates. It has nothing to do with any of it. People all over Ireland have been telling Labour for years that it should defend working class people, public services and natural resources, that it should work for social fairness and that it is not Labour’s role to implement austerity and take the crisis out on the poor. The Labour top never heard these voices. During the campaign, the party drifted so much to the right that everyone else, with the exception of Fine Gael, was left of Labour.

During the campaign, Fine Gael and Labour told the public that they made sacrifices, but that it had been absolutely necessary. In the meantime, however, it had become clear that the government’s master plan is working: austerity has been like chemotherapy – painful and sickening, but effective. Forcing the public to bail out bankrupt banks had been the right choice. The mistakes and blunders made by Fianna Fáil during the immediate aftermath of the financial breakdown had been corrected. Such systemic failures can no longer occur. As a result of all this hard work, the Irish economy is now growing fast again. The problem for the government parties is that the Irish never agreed to these policies. They never voted for it. They rejected austerity in 2011. They rejected the government policies in the local elections of 2014.

As Fintan O’Toole writes in The Irish Times, people do not believe much of anything from a government that introduced five regressive budgets in a row and presided over a near doubling of child poverty (see here). Regardless of ideological inclinations, many people realise that key parts of what makes a civilised society – public investment, housing, education and healthcare – have been devastated. They know Fine Gael’s promise to simultaneously cut taxes and improve public services was a lie. They know that cuts in social welfare increased poverty, that it brought some people to the brink. They know that wages went down and that many of the new jobs are low paid, low quality jobs (see here).

O’Toole holds the election result for ‘an enormous shift to the left’ (see here). This is a very strange conclusion. Fianna Fáil did well because the party moved onto mildly social democratic ground, promising greater fairness and investment in public services. If you define the left as those campaigning for substantially greater investment in public services, the case that the left of centre won can indeed be made: Fianna Fáil, Sinn Féin, the new Social Democrats, the Greens and the Anti-Austerity Alliance all did well or relatively well. This is, of course, a very heterogeneous company, but it represents a lot of voters that favour a shift of priorities towards decent services, a fair use of public resources and a reversal of the drift towards inequality.

But there is no question about an ‘enormous shift’ or anything radical. Housing in Ireland became an enormous issue after the property crash. The population was forced to bail out the banks. In the meantime, the banks mercilessly started to repossess mortgage holder’s homes. Between September 2014 and September 2015, the number of repossessions rose by 80%. This is, as Padraig O’Mara writes, without a doubt, an important determinant of the homelessness crisis in the country (see here). The dramatic decrease in social housing output by the local authorities is another determinant (see figure 2).

Figure 2

Source: Neri Institute.

Thirty per cent of the Irish population (1.3 million people) experience deprivation: food shortages, fuel poverty, insufficient means to buy clothing or schoolbooks or to pay for a medical doctor or a dentist. Those without private health insurance, have to wait for months, sometimes for more than a year, to see a consultant. There are not enough beds in the hospitals. In the meantime, the number of millionaires in the country increased by 462 per cent – from 16.000 in 2008 to 90.000 in 2015 (see here) Most of this was barely mentioned during the campaign. The consequences of austerity are visible all over housing, health, education and infrastructure. In 2013, the level of public infrastructure investment was the lowest in 50 years. Despite numerous protests across the country against Irish Water and the new water charges, this issue was also almost completely absent during the campaign. This does not strike me as a shift to the left. The parties very carefully moved a bit closer to the centre, within strict confines.

The rhetoric of the government about the improving economy may have even played against them. A recent survey showed that 85% of the respondents state that they personally have not felt any benefits from any betterment. It fuels the perception that the gains of the improving economy go to the rich and not to the middle class, let alone the poor. Ireland’s dual economy has a strong geographical component. Growth is mainly concentrated in and around Dublin. The negative equity generation is another group that is unlikely to be impressed with the improving economy. This group took out large mortgages at or close to the peak of the market. Their assets are now worth less than their mortgage, while many of them enjoy less income and often have more expenses (such as childcare) (see here).

What about Sinn Féin? SF won 13.6% of the vote and is now the third party in the country. There is one issue that the three main parties, Fine Gael, Fianna Fail and Labour, agree upon: they all want to keep Sinn Fein out of government. Sinn Féin’s historical links with the provisional Irish Republican Army remains a major stumbling block. The Irish Government alleged that senior members of Sinn Féin have held posts on the IRA army council. The SF leadership always denied it. Sinn Féin has also been accused of criminal acts. Great controversy erupted when SF chairman McLaughlin insisted on Irish television that the IRA’s killing of a mother of ten young children accused of spying for the English in the early 1970s was wrong but not criminal given the context of the conflict. Sinn Féin campaigns on state-led economic investment, affordable health care, protections for renters, more resources for social welfare and education. It sounds good. The problem is that, as the other parties never get tired of pointing out, Sinn Féin is in government in Northern Ireland. There it supports policies that are diametrically opposed to what it proposes to do in the South.

Sinn Féin will not become a coalition partner of the new government and Labour is certainly out. The most likely outcome is a government of Fine Gael and Fianna Fáil. If that happens, we will see a continuance of the policies of the past, perhaps with some improvement. There will be some modest investment in health care, social housing and education. But it won’t make much of a difference and discontentment and anger will continue to fester (see here).

Did Fine Gael and Labour spearhead the economic recovery? Stiglitz observed that in the years since the financial crisis hit in 2008 Ireland had overall, low or no growth. Is Stiglitz right? Did austerity ultimately work, as the government reaffirms ad nauseam? Is the Troika right when it shows off Ireland as the poster child of successful austerity? More than one commentator has argued that the expansion of traded services is an illusion (see here). Regan writes that ICT services now account for over 50 per cent of Irish service exports (see here). The supposed growth in service exports merely reflects an accounting entry by US multinationals. It is a tax evasion strategy that makes Ireland’s adjustment look like a success story. The revenues of companies such as Google and Apple are astronomical and a large part of it is booked in Ireland for tax purposes. Aidan Regan from UCD agrees: there is no doubt that the growth figures are grossly inflated. But this does not mean that no growth took place. According to Regan, 104.000 full time jobs in ICT have been created since 2012 (see here).

The answer to the second question – does Ireland prove the benevolence of austerity? – is a clear and unequivocal no. Regan argues that the Irish recovery has nothing to do with the Troika-led adjustment of austerity and that it has everything to do with a state-led developmental strategy. I will return to this in a follow-up article.