When Irish eyes are sequestering

(Published at The Morningside Post)

A citizenry once again?

If Irish eyes were smiling on St. Patrick’s Day, it can’t have been for long. For Ireland, second only to the US when it comes to Western country fiscal imbalances, is now in its sixth year of “austerity.” Yet the “austerity” is too little too late.   “Let my country die for me,” says James Joyce’s Dedalus, and the recipients of Ireland’s intractable welfare state seem to concur. Or put another way, just as Joyce’s awestruck Bloom saw in the stars “a past which possibly had ceased to exist as a present, before its future spectators had entered actual present existence,” so too for the indebted children of Ireland, who will someday inherit an economy that spent their money before they knew it existed.

Meanwhile, here in the brokest nation in history, if any SIPA students awoke on the Morning After the Sequester to find that government had somehow managed to keep the water supply from running red with blood from used needles of toddlers who had no choice after Head Start’s defunding but to buy heroin from laid off TSA workers, any ensuing twinkles in the eye at the notion that life might just go on, even with government only 41.5% omnipresent rather than 42%, must have vanished  with the receipt of a dour email from the Director of Financial Aid:

“SIPA students – Are you wondering what sequestration means for your financial aid?” What it means, it went on, is your life just got 5% more austere: what with 5% higher loan fees, and a 5% reduction of the Federal Work Study program, it seems that now only Obamacare’s condom allowance stands between you and a dire scenario in which you’d have no choice but to switch to a more lucrative concentration, like International Finance.

For these are the times that try nations’ finances. We Americans, for example, could liquidate the entire US economy, invade Canada, liquidate Canada too, and we’d still have a financing gap. Not that it matters. As former Secretary of State Hillary Clinton put it when questioned about the circumstances of the Benghazi attack, “What difference does it make?” If you ask Prof. Stiglitz, not much: “The debt is not a big problem right now,” he told CF’ers last Fall.

Indeed, much more worrisome to America’s top leaders than trivialities like Triple A credit ratings is the idea of not being able to pile on more debt. Because even with the highest-ever debt as a percentage of, er, everything (i.e. Gross World Product), we have just barely enough money to gracefully lose to one of the relatively poorest insurgencies in history: As Army Chief of Staff Ray Odierno noted regarding the War in Sequestered-stan, “When '14 starts... I either have to send in forces that aren't ready or I have to extend those that are already there.” Unfortunately you can't buy resolve, particularly for a citizenry that lives off of the resolve of future generations.

Ireland would seem Exhibit A for those who warn you can’t solve a spending crisis by spending less. In the last year, despite surrendering the title for the West’s worst deficit-to-GDP ratio to the US, Ireland’s 14.6% unemployment rate hardly jigged, while American unemployment dropped below 8%. “Reduce Bloom by cross multiplication of reverses of fortune,” writes Joyce, “and by elimination of all positive values to a negligible negative irrational unreal quantity.” That, incidentally, gives you the approximate Irish growth rate.

Yet for all the talk of “extreme fiscal austerity,” as Paul Krugman called Europe’s scourge in his February talk at SIPA, you might as well light a penny candle from a Solyndra solar-panel if you think you can seriously change the government’s preeminence once it reaches Irish levels. While low tax rates have brought in extra FDI revenue, spending persists. Of all the OECD states, Ireland subsidizes long-term unemployment at the highest rate. The competition for shortest workweek in the EU may be fierce, but the Irish are second only to the Danes. And the minimum wage is $11.20 per hour to America’s $7.25, though if you’re on the government payroll, as the Irish are nearly twice as likely as Americans to be, you’ll most likely earn more, work less, and retire earlier on a more unfunded pension than your private-sector counterpart footing the bill. “We served neither King nor Kaiser…and we’ll not serve them now!” boast Sinn Fein protestors who valiantly refuse to “serve” their creditors with such humiliations as paying for the government dependence they consume.

What’s more damaging to a nation than debt itself, in other words, is the tempting corollary that debt can substitute for a resilient citizenry.  Nowadays, for an excitable Greek hair-stylist who loses his government danger pay, joining the fascistic Golden Dawn in not so much immoral as a natural reaction to political shortcomings. Or as Professor Khalidi told NPR this week, the failure of politicians to “produce results is one of the major reasons that Hamas has become the power that it has become in the 90s and in the 2000s.” Stoning adulturesses simply being what one does when government falls short.

It’s a bit subtler in the US: “You haven't heard of the Bureau of the Public Debt before?” asks the BPD’s homepage. “We're a [ahem] small agency within the Department of the Treasury. Our customers are your neighbors, co-workers, and most likely you, too.” Ah yes, debt. Rings a bell now. But what difference does it make to a citizenry whose rulers safely assume no one's ever heard of it. So as long as you get your subsidized loan, forgivable pending employment at a place like the Bureau of the Public Debt, just let the adults deal with it.

Fixing our finances means recognizing we have a pricing problem and bursting peoples’ bubbles. As students with subsidized loans, that could mean our bubble. Will the same students who stay on their parent’s health insurance until age 26 be able to adjust? As Dedalus puts it, “Ireland must be important because it belongs to me.” And so it is that we must all be worth $16 trillion of debt. Because our entitlements belong to us.