Monday, July 4, 2011

Was Bertie Ahern a socialist?

In 2004 Ireland's Taoiseach (prime minister) Bertie Ahern caused scornful amusement when he claimed that he was, in fact, a socialist. Ahern's party Fianna Fáil had been in coalition with the neo-liberal party Progressive Democrats, and was widely seen as being an ideological partner to their right-leaning agenda too. Some commentators reacted with anger at Ahern's claim:
Speaking as a panellist on RTE TV's Questions & Answers, the journalist Marie Mulholland was excited about "all the things we now have to look forward to: free healthcare for all, redistribution of wealth, eradication of poverty ..." She may have been speaking ironically.
I was one of those bemused by Ahern's claim at the time. But was there any truth to it? Let's look at the data. Below is an OECD graph showing Ireland's government spending on social protection as a percentage of GDP from 1994 to 2005.
After falling a little, spending soon rises past the point when Ahern took office. OECD's graphs unfortunately stop in 2005, while Ahern remained in power for another couple of years.

Anyway, since Ahern's government was criticised a lot for its health policies, lets look next to health.
Just for comparison, let's also look at expenditure on law, order and defence as a percentage of GDP over the same period:
So far Ahern is looking like a left-leaning hippie who abandoned police and military spending in favour of health and social welfare. But the years covered here involved considerable changes in GDP itself, which could make the graphs misleading. OECD's source data allows us to look at social protection per capita also (at current prices and current PPPs, in US dollars):
We see rapid and sustained increases in social expenditure: by 2007 spending was up 143% per capita from Ahern's first year in 1997. The same measure in constant prices (2000) and constant PPPs (2000):
Up 87% per capita from 1997 to 2007.

There were also demographic changes over this period though. Most European countries had relatively low fertility rates meaning that populations were growing older. This could result in rising expenditure on pensions (which is covered in social protection figures). Yet if we exclude all payments covered under 'Old Age', we still see a dramatic increase in spending on social protection, from $2,520.5 in 1997 to $5,974.6 in 2007 ($2,617.9 to $4,789.8 at constant 2000 prices).

In any case, Ireland is unusual in Europe, with a relatively high fertility rate and, during most of Ahern's time in office, massive inward migration. As a result the elderly proportion of the population was very low, one of the lowest in the OECD. In Ireland the ratio of inactive population over 65 to the total labour force was 24% in 2000, dropping to 23% in 2005 and rising back to 24% by 2010, suggesting that increases in spending on pensions over this period reflects real improvements in the income of elderly people rather than simply an increase in the proportion of people receiving pensions.

In other words, Ahern's government increased spending on old people and on other kinds of social protection. Unemployment benefit spending increased only marginally, probably reflecting the low unemployment over this period. At constant prices, health spending doubled from 1997-2007. Spending on family allowances rose two and a half times, as did spending on incapacity benefits and pensions.

The general picture is one of massive increases in social welfare of various kinds over the course of Ahern's time as Taoiseach, what we might expect from a 'socialist'.

Yet in other areas Ahern took right-wing decisions, privatising state companies, like the airline Aer Lingus and telecommunications firm Eircom.

Let's dig a little deeper. Here is Ireland's tax revenue as a percentage of GDP during Ahern's reign:
This slow decline suggests that GDP either grew faster than tax revenue, or that revenue actually declined. In fact tax revenue per capita rose almost threefold, even while population was also rising. The clue, then, is that GDP was rising even faster.

And this gets at the heart of the socialist Ahern riddle! His government did massively increase social expenditure, but did so without increasing taxation, relying instead on the rising tax revenue caused by a booming economy. The problem, of course, was that reduced revenue caused by the recession threw the budget immediately into deficit. Ahern wanted it all: reduced taxes and increased spending. Rather than a socialist or neo-liberal, Ahern largely took the path of least resistance. He was a populist.

(Bertie photo from ProhibitOnions at Wikipedia.)

2 comments:

  1. Indeed, and we should all remember that he and Fianna Fáil were doing exactly what we wanted them to do. Our main parties have a pragmatic approach to policy and governance. Give the people what they want and they will keep you in a job. Unfortunately the current government doesn't have the resources the previous government did to make us all think we're special but if they did they would.

    Our political leaders form a fuzzy linear progression that goes from socialism to communism. As Michael McDowell once put it during the 2007 general election debate on RTÉ when talking about Labour, Sinn Féin and the Greens respectively, if I may paraphrase a little; 'I'm sitting here with the Left, the hard Left and the Left-overs'. And bizarrely, the communists (such as Joe Higgins, or Confused from Dingle as I prefer to call him, and Richard Boyd Barrett) are the ones who sound like libertarians when they say no bail outs, no taxing of the workers, screw the Europeans, let them look after their own debts etc. etc. Madness! I don't know whether to join the ranks of the hard left or the hard right (who don't exist here).

    Ahern was right when he said he was a socialist. This is after all a semi-socialist state and the grip of socialism is getting tighter and tighter (i.e. socialism for the rich). Just look at your next wage slip and look at the way you are swindled under that legalised stealing called Universal Social Charge. But that's another issue.

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  2. Yeah, it's a strange one: the OECD figures show similar trends in other countries too. In the US, for example, the Bush administration was supposed to be very right-wing. Yet its social expenditure as a percentage of GDP also tended to RISE:

    2000: 14.5%
    2001: 15.3%
    2002: 15.9%
    2003: 16.0%
    2004: 15.9%
    2005: 15.8%
    2006: 16.0%
    2007: 16.2%

    Likewise, health spending as a percentage of GDP soared over Bush's time in office: 5.9%, 6.3%, 6.6%, 6.8%, 6.9%, 7.0%, 7.1%, 7.2%. I've seen some libertarians and paleoconservatives deride Bush as a "socialist" too.

    In general, spending on social protection has tended to rise, right across the OECD, for decades. So does this indicate a general shift to the left? I'm not sure, really. But I can imagine that governments will try the Bertie trick of increased spending and decreased taxes whenever they can. Social welfare AND tax cuts - the bread and circus of our age!

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