Book Review: Sins of The Father by Conor McCabe, The History Press, Dublin. (ISBN 13: 9781845886936 ISBN 10: 1845886933)

Like a ship in distress or an army in retreat, Ireland is awash with rumours about what caused our downfall. Among certain liberal citizens the idea has taken hold that we’ve all been doomed by a kind of original sin, a genetic predisposition to buying houses. This is the neoliberal equivalent of Catholic Guilt. We are all sinners and therefore we are all guilty. What are we guilty of? Desire, of course. Without desire there would be no accumulation. And what did we desire most of all? Property.

The very first thing that Conor McCabe does in this meticulous, elegantly written and necessary book is to explode the myth that the Irish are more given to owning their own houses than their European neighbours. We are, in fact, 18^th in home ownership in the EU (his figures come not from opinion pieces in quality dailies but from Eurostat and the Irish Census). Ireland is ‘bucking European trends with a declining level of home ownership’, with ownership figures falling from 79% in 1971 to 74% in 2004. Spain, Italy, Greece and Poland are among the seventeen countries with higher levels of home ownership than us.

So where does the myth of the property gene come from? This is the magical mystery tour that McCabe insists we must take. There are no comforting statistics to be conjured from the air, no pseudo-historical fictions, no poetic discourses based on John B Keane’s The Field. To understand where we are now, McCabe insists, we have to start where we started. To understand the present we need to explore the past.

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The book is divided into five chapters - the first four covering Housing, Agriculture, Industry and Finance, and the last dealing with the economic collapse of 2008 and following years. A critical historical perspective is adopted throughout.

The chapter on housing, for example, traces the continuing efforts of a petit bourgeois governing class to convince working class people that they should buy houses. These efforts include a relentless assault on the public provision of housing together with an equal pressure to support the speculative builder in his efforts to extract profits from the urban poor. As early as 1925, WT Cosgrave was declaring that ‘we wish to resuscitate the speculative builder’ and his government was busy dissolving reforming corporations that wanted to clear slums and build houses out of the public purse. Cork Corporation, for example, was dissolved and replaced by a man named Monaghan who declared that ‘the Corporation was a business concern, to be run on business lines’. The Housing Act of 1924 went hand in hand with these actions. Under the act speculators were provided with cash grants to encourage them to build houses for their own use, for sale or for rent. It also offered lower local authority rates. The speculator was further strengthened by a subsequent 1925 act.

By contrast the Fianna Fáil government of 1932 is generally believed to have built public housing on a larger scale. This is true. However, the houses were available only to those who could afford to pay rent and therefore did not touch those most in need of housing - the urban tenement dweller. Even among those who qualified the situation was far from rosy:

In 1940, Jim Larkin told the Government Housing Commission that up to “20 per cent of the tenants in the Crumlin area were living below starvation level”. His evidence was collaborated by Dr C. Hannigan, Crumlin, who told the Dublin Board of Assistance in May 1940 of a case of “…a man and his wife and eight children, whose income was 25 shillings a week, out of which rent and light absorbed one-half a week. The children were sent to an outside school so as to get the benefit of the midday free meal. The diet of the family consisted of bread and tea.”

Nevertheless, under that first FF government 53,000 dwellings were constructed by local authorities and a further 66,000 were constructed by private persons under the aegis of the Housing Acts.  This was an enormous achievement and represented a public effort to house those most in need on a scale never before seen in the state. Had it continued Ireland could have boasted that it solved it’s housing problem, and many other problems besides. But the achievement would not be repeated and in due course the drive to persuade the working class to buy out their homes from public ownership would see the state selling more than it was building - a criminal waste of the state’s housing stock. It would take thirty years to persuade the working class that public housing was a bad thing; that it was a burden on their fellow-citizens; that home ownership was in their blood and genes; that those who lived in publicly provided housing were failures; and that getting themselves into more debt than they could ever repay was a good thing for themselves and for the state. And they bought the story very reluctantly indeed. By the time the working class had exchanged its publicly supplied housing for speculative builder supplied housing the arse had fallen out of the banks and the working class knew it had been sold a pup. The critical question is who sold it to them and Conor McCabe is the man to answer it. It is, of course, more complex than the housing question. We need to examine the entire structure of the state, its class divisions and how its elites exercise power.

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Once I remember asking my father - who farmed a princely estate of 11 acres - why he didn’t join the IFA which was, at the time, involved in a certain amount of protest and conflict with the government. His reply was that the IFA was for ranchers. I thought he was borrowing the term from American films - I didn’t realise that it had a long pedigree here. As early as 1923, when my father was 10 years old, Senator JT O’Farrell was using the term: ‘The ranches were created by filling the emigrant ship’. As it happens, all of my mother’s siblings emigrated one way or another. My father’s elder brother emigrated. We had as many cousins in England as we had at home. My mother’s youngest brother left a pathetic diary of his attempts to find work as a labouring man in the 1930s. Faced with the fact that there was no work to be had he spent a year picking periwinkles, foraging the coast and trying to raise enough money to buy a boat to fish from. Eventually he followed his older brother, took the little ferry to Cobh and walked into the Royal Navy recruiting office there. He had risen to the rank of leading stoker by the time he died. He was left-wing and anti-fascist, as was his older brother JJ who survived the war and was a steward in the Post Office Union. My father’s brother spent most of the war in a Japanese concentration camp. JJ, who had no love for him, used to say that he was the only man to come out of a Japanese camp fatter than he went in. My mother’s sisters went to England and were lucky enough to find a place that would train them as nurses - an ambition that was completely beyond them in class-ridden Ireland. All of them came from the ranks of the rural poor, a step or two above the destitute, the occasional labourer or the spailpín but brought to the same condition by the Great Depression.

So there was a strange feeling of déjà-vu for me here:

[A]ny move to make small farmers economically self-sufficient would affect the supply of calves to graziers and fatteners - not because they would automatically switch to tillage, but because such redistribution would allow small farmers to fatten calves past the time which their present holdings would allow. The pressure to sell a calf after one to two years would lessen, and graziers and fatteners may be compelled to pay more for the product. The ranchers didn’t just want small farmers to produce calves for them, they wanted poor small farmers who were not in a position to feed calves for much longer than a year.

What did Fianna Fáil and the Civil Service think of Irish farmers? We’re all familiar with De Valera’s vision of a ‘countryside [that] would be bright with cosy homesteads, whose fields and villages would be joyous with the sounds of industry, with the romping of sturdy children, the contest of athletic youths and the laughter of happy maidens, whose firesides would be forums for the wisdom of serene old age.’ That speech was made in 1943, two years after my uncle Donal Regan went down with his ship in a minefield near Tripoli. Had he lived to hear it he would, no doubt, have found it moving and nostalgic. It was the kind of Ireland he could only dream about even when he lived there, working in the miserable cold of low tide to fill bags of periwinkles for the export trade.

But in the post-war years the Irish government opened negotiations with the UK with a view to regularising our trade relations in the aftermath of the Economic War and WWII. In response to a British questionnaire about Irish agriculture they summed up the reality of life in the Irish countryside in altogether more straightforward terms: ‘‘[It] stated that substantial industrialisation was highly improbable and “the peasant character of the economy is evident from an analysis of agricultural equipment and of size of holding”. There was little effort at modernisation, relatively low levels of tillage (incredibly, in the 1920s Ireland was importing wheat and flour) and the shorthorn cattle breed that was mainly raised here was unsuitable for both dairy and meat. Irish agricultural exports, which formed such a large part of Ireland’s entire export trade, were completely dependent on cattle ranching and the cattle ranchers were dependent on the small farmer working at or just above subsistence. But the ranchers were the natural constituency of Fine Gael, and, although they gave lip-service to the small farmer and the urban working-class, Fianna Fáil too. Even in 1957 Sean Lemass was couching his talk about a drive towards industrialisation in terms of the cattle export business. In order to maximise the potential of agriculture, he suggested, we needed a greater level of industrial development. Even in the 1960s Ireland was Britain’s larder and rural poverty was an essential part of the chain of profit that allowed the live export trade to continue to the satisfaction of a small number of rich and powerful landowners.

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So what about industrial development? What has got us to a situation where our exports are led by multinational corporations pay low-rate corporation tax, use raw materials sourced elsewhere and manufacture products sold elsewhere. Obviously, a country needs indigenous industrial development. Sure the present crisis situation is the result of mistakes rather than deliberate effort?

The evidence presented in this book suggests otherwise. The mainly Fianna Fáil-led administrations appear to have been fixated on the construction and service sectors. The principal benefits to the Irish economy from multinationals was in these areas. They had little effect on indigenous industry who were not called upon on any large scale to supply products. Nor did they directly supply products that we had to import prior to their arrival. The whole raison d’etre of multinational corporations here was the tax break; profits were studiously repatriated. Out of a total sales (for multinationals) of €109 billion, a grand total of €2.8 billion was paid in tax. A further ‘downstream’ benefit to the economy, ‘via payroll costs, Irish materials and services amounted to €19.149 billion… Around 80% of money generated by IDA-supported companies completely bypasses the Irish economy.’ Who then benefitted from the arrival of these companies? MacCabe’s answer: ‘builders, accountants, bankers and lawyers.’

A recent TASC study called Mapping The Golden Circle showed that Irish wealth is owned and managed by a relatively small number of people, and McCabe’s work suggests that this is certainly not a new thing: ‘In 1970, the two companies (Irish Cement and Roadstone) merged to become Cement-Roadstone Holdings, under the chairmanship of former Taoiseach Seán Lemass. One of the directors was Desmond Traynor.’ Charles Haughey (married to Lemass’s daughter) was to continue that relationship with Traynor, as we now know. This golden circle operates in a very simple way. The political wing works to line the pockets of the commercial wing, in what McCabe calls ‘the unabashed transfer of public funds to private hands, with rent as the conduit.’ Many of the most famous (or notorious) developers were direct funders of Fianna Fáil. The Gallagher Brothers, the two biggest building contractors in Dublin were, according to Rosita Sweetman, writing in the Irish Times, ‘among the biggest contributors to Taca. And Taca is the fundraising section of the Fianna Fáil party.’ And, as she said, ‘the names “Gallagher”, “McInerny” and “Silk” will re-occur constantly on the billboards.’ The Gallagher brothers went broke, if memory serves, in the 1980s, leaving huge debts and workers unpaid, and as I write McInerny has announced that it is going into liquidation.

In 1969, despite all that had been said and written about property development in Dublin, ‘only 12 new office buildings have been completed, offered on the market, and successfully let over [the previous] five-year period’. This moderate demand for office space did little to dampen speculation. The newspaper noted that around 1.5 million square feet of office space was planned for the foreseeable future, of which, 467,200 square feet was already under construction.⁴² Into this breach came the government, and public money was used to absorb the speculative adventures of private investors. ‘It is an acknowledged fact that the government has played a significant role in the office-letting market to date’, wrote The Irish Times. ‘In fact, lettings to the government or semi-state bodies make up roughly half of the new accommodation now occupied. If they withdraw from the market, the effect must be most significant.’⁴³ Government policy was both fuelling speculation and soaking up the result. It was promoting a phantom, using millions of pounds of public money to do so, almost all of which was ending up in the hands of private speculators, builders and investors.

And so, at every turn, the wheel ends up pointing to property. Perhaps Fintan O’Toole was partially right. Perhaps certain Irish people have a genetic predisposition to speculate in the property market. If so, the gene is almost certainly bound in the double helix with a propensity to corrupt politicians.

McCabe rightly sees the stock of publicly funded housing as a national resource. The land and its mineral resources, the sea and it’s living creatures and its mineral deposits is another such resource. That the state has sought at every hand’s turn to squander these resources can only be explained in terms of veniality, corruption or short-term political gains. Even in straightforward capitalist terms, our treatment of our oil and gas reserves makes no sense, as an oil-man once explained to me. A series of acts of parliament, for example, has progressively eroded the tax-take from mining operations in Ireland even at a time when such operations were immensely popular and in high demand. The 1967 Finance Act removed the tax liability on the first twenty years of any mining operation in Ireland. Conveniently, twenty years was the lifetime of the average mine. So the mining companies had been given our mineral resources for free. Did they at least create jobs? Between 1961 and 1971 (the peak mining years) employment in mining and quarrying actually decreased by 149. It wasn’t even a fire-sale. The same process would get underway with the arrival of the oil companies. As Robert Allen and Tara Jones put it in their book on the multinationals here: ‘God gave us Bantry and we gave it to Gulf Oil’.

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Fianna Fáil ministers used to tout the finance industry (sic) as one of Ireland’s great successes. In this narrative, Ireland achieved full independence when it broke the link with sterling. It was the maintenance of the parity link that caused so much misery in Ireland, the story went. Once we joined the European Monetary Union we became free women and men in the fullest sense. In fact, it suited the banking industry to keep things the way they were. The alternative was a weaker Irish pound and cheaper credit to indigenous industry. A weak pound was anathema to the banks and so ‘Foreign Direct Investment’ in the form of the multinationals was seen as a solution. When FDI began to falter, another wheeze was required to keep the banks in the manner to which they had become accustomed. It came in the form of the Irish Financial Services Centre. MacCabe traces the history of the initiative, showing how the roots of it were established in the early Free State years to the present. This chapter on Finance is one of the most fascinating of the book. It would be impossible to summarise here. However, the IFSC established Ireland as a tax-haven equivalent to the Cayman Islands and Bahrain. Other countries were well aware of its existence. In a sense, it turned Ireland into a kind of money laundry. Having been the poor relation of the USA, Britain and Europe, we finally became their highwayman. Our cry was, ‘Your money or your industry!’

Of the world’s tax-havens, the New York Times wrote in 1991:

They occupy a kind of shadowland of finance that is little understood but increasingly important. Broadly, these banking havens are places that offer customers the right to strict secrecy, few regulatory constraints and an official indifference to tax evasion. The leading havens include Switzerland, the Cayman Islands, Luxembourg, the Bahamas and the Channel Islands. Sometimes Hong Kong, Singapore and Bahrain are included as well. New entrants are crowding the field. Ireland, for example, established the International Financial Services Center three years ago as a tax haven in Dublin. Already, 170 financial institutions have set up shop there.

We now know where this ‘strict secrecy, few regulatory constraints and an official indifference to tax evasion’ leads. It leads to cutbacks in hospital services, services to the disabled, wholesale job-losses, a race to the bottom for pay and pensions and large bonuses for the bosses who implement them.

The IFSC came into its own with the financialisation of capitalist economies which David Harvey has written so clearly and eloquently about. Sins of The Father traces the Irish iteration of this policy and its disastrous consequences. Esoteric terms like ‘Over the Counter’ (OTC) derivatives and Credit Default Swaps (CDS) are clearly explained here and their very real effect on the economy of a small country like Ireland is laid out. It is worth reading the book for this chapter alone.

One of the dark joys of the book is McCabe’s unerring instinct for irony. Here is Michael Casey, former chief economist at the Central Bank, being quoted on the soundness of Irish banks in 2007: ‘The difference between Ireland and the US was that in the US,  ‘several… banks were greedy, incompetently run, and that the US system of regulation failed almost completely.’

The Financial Regulator examines the books of all the banks regularly with a fine-tooth comb and is fully engaged in the stress-testing exercises - which hypothesise very difficult scenarios - and then assess the banks’ abilities to deal with them. No one else in the country would have anything like the detailed knowledge of the financial sector. The Central Bank’s and Financial Regulator’s assurances are the best indicators Irish shareholders are going to get.

It is important to understand that not only had Ireland become a tax-haven for offshore tax-dodgers, but it ‘had become its own tax-haven’. The golden circle made full use of the IFSC. Why wouldn’t they? It was cleverly constructed for them as a place to bury their profits, a consolation in their old age, a way to play like real capitalists. Rezoning and property speculation generated the profits. The IFSC buried them.

Inevitably, the whole house of cards would have fallen were it not for Brian Lenhian’s famous bank guarantee scheme. That scheme guaranteed that the speculators, developers, politicians and financiers had time to dry their eyes and their palms and cover their asses. It is important to remember that present-day gurus like David McWilliams thought the plan was a sound one:

‘Finance Minister Brian Lenihan has made a wise choice. By coming up with a unique, Irish plan - guaranteeing all deposits - instead of importing a failed solution from abroad, he has installed confidence in the Irish financial system.’ ‘Most importantly’ he added, ‘Irish banks are now safe. This is the single most crucial upshot of yesterday.’

The final chapter traces the path from the bank guarantee to the EU/IMF loan-cum-shock-attack that is euphemistically called a ‘bail-out’ by our media.

In his conclusion, McCabe observes that ‘the significant power of Irish banks to dictate economic and monetary policy, and to protect themselves against the negative consequences of such policies, had developed over decades.  The social and economic forces which fed and sustained that power, run deep within Irish society.’ These social and economic forces concentrate political and commercial power in their own hands while farming out the dirty business of creating jobs to multi-nationals and the public service. The elite class, the golden circle that likes to portray itself as the captains of industry, the banking geniuses, the kind of men that you have to pay good money to get as CEO, is a parasite upon the backs of parasites. This excellent book should be required reading for every journalist and politician in the country. In fact, the state should distribute a free copy to every citizen in the country - it might help us to understand how and why we ended up as lodgers in our own country.

William Wall is the author of four novels, a collection of short fiction and, three collections of poetry, the most recent of which, Ghost Estate, was published by Salmon in 2011. More information from his website at www.williamwall.eu