Speech by Paschal Donohoe TD, Minister for Finance, Public Expenditure and Reform

Populism- A Moderate response

Paschal Donohoe TD, Minister for Finance, Public Expenditure and Reform

Collins Institute, Saturday June 17 2017

INTRODUCTION

Good morning everyone.

I want to thank the Collins Institute and the Wilfred Martens Centre for the invitation to speak this morning.

It’s been about 60 hours since I was officially appointed as Minister for Finance as well as Minister for Public Expenditure and Reform and it has been something of a whirlwind.

We had the debate on the new Government in the Dáil, the trip to the Phoenix Park, our first cabinet meeting in Aras an Uachtaran after midnight, an early morning trip the next day to Luxembourg for two days of meetings with my fellow European finance ministers and this morning I am here to talk to you about politics and populism.

I love my new job, but I think I might take the afternoon off!

But we are looking beyond domestic matters this morning and what I will do in the course of my contribution today is frame the discussion by talking a little about what populism actually is, because we cannot win if we do not know what we are battling against.

I then want to talk about why there has been such extraordinary growth in populism, why in recent years populism has become so popular.

And then, and most importantly, I want to talk about what our response should be, as moderate centrists, with a message of steady, but meaningful change.

INTERNATIONAL POPULISM

2016 will probably be remembered as the year in which populism found its people – and the people found it.

A research paper from the Harvard School of Government estimates populists parties captured about one in every eight seats in recent European elections with its share of the vote rising from 5% in the 1960s to over 13% now.

13% may not sound huge, but of course electoral support and influence are often very different things. It is arguable that the rise of UKIP, for example, did not see that party win power, but did see that party win the argument.

This argument is even starker given its recent failure to win a single seat in the British parliament.

John Judis, a former editor of The New Republic, in his book “The Populist Explosion” defines populists as those who “assume a basic antagonism between the people and an elite”, which is at the heart if their political identity, and whose demands will not be satisfied by incremental progress but, rather, “must be delivered now”.

This definition has been added to by Jan Werner Muller, a professor of politics in Princeton University, who said;

All populists oppose “the people” to a corrupt, self-serving elite…But not everyone who criticizes the powerful is a populist. What really distinguishes the populist is his claim that he and only he represents the real people.

For populists, nothing but total unambiguous victory will do.

No compromise.

No surrender.

And all in the interest of the majority whose lives are blighted by a nebulous elite.

Because unlike in the past, when we rightly fought against the injustices experienced by minorities, now the narrative is that is the majority who are oppressed, the majority who are discriminated against and the majority against who the system is rigged.

So, we live, populists claim, in an age of the threatened majority.

This is a potent message and often difficult to fight against.

All, though, is not lost.

While 2016 was a bad year for centrist politics, 2017 has given more hope for optimism.

The Dutch and particularly French elections, presaged by the outcome of the Austrian presidential election last summer, have seen the extremes underperform and moderate voices win the day.

This, I believe, is linked to the strengthening of the Eurozone economy and the belief amongst many that, finally, things are looking up. Carl Bildt, writing for Five Thirty Eight, said the “populist wave in Europe has lost steam” and suggests the fallout from Brexit, as well as the response to events in the United States since the election there, has led to a rethink by many European voters.

Nevertheless, an international trend of aggressive populism, where a false dichotomy of the “people” vs the “elite” has taken root.

This approach is evident in many countries, including, I believe, our own.

IRISH POPULISM

We have in this country been spared the ugly, often intolerant, hard right that conflates xenophobia and nationalism.

But we have seen a ballooning of populism of the left, which depicts Ireland as a country where decisions are made only in the interests of elites, not of the people and where a government of the centre is portrayed as incapable of representing “normal” people.

Where there are no “companies”, only “corporations”.

Where there are no “leaders”, only “elites”.

And where it is not just our competence as centrists that is under attack, but our compassion.

Too often, particularly since the election, those on the fringes of the Irish political spectrum have claimed a monopoly on authenticity where the compassion of those of us in the governing centre is challenged on an almost daily basis.

The Dáil’s left flank, the absentee legislators who rejected the chance to govern in favour of perpetual protest, competes in an auction of outrage over every single matter, where the loser will be those who can’t shout.

This matters, not because it makes political life harder for people like me, but because the issues that should be talked about and considered by everyone in politics are not getting the attention they deserve.

I firmly believe that dozens of Dail deputies on the populist left do not think about things like job creation, competitiveness or economic growth from the start of the week until the end.

All of these things are taken for granted.

Instead of thinking about how to maintain and grow national income, they think only of how to share it out, and use the language of division and perceived injustice to make their point.

Any tax reform is seen as Thatcherite.

Any spending reform is seen as austerity.

The sole message is to spend more and more and more.

And if you dare argue against that mantra, you are the elite.

You are the enemy.

THE REASONS POPULISM HAS GROWN

It is not enough, however, simply to define and identify populism. We must also understand why populism has gained so much ground in recent year.

Because it is only through an understanding of the social and economic forces that have helped it succeed that we can hope to formulate an appropriate response.

I would like to quote from Hillbilly Elegy, last year’s seminal book from JD Vance;

We can’t trust the evening news. We can’t trust our politicians. Our universities, the gateway to a better life, are rigged against us. We can’t get jobs. … This isn’t some libertarian mistrust of Government policy. This is a deep scepticism of the very institutions of our society.

Vance says, these communities are not just “haemorrhaging jobs”, they are “haemorrhaging hope”.

James Carville, Bill Clinton’s campaign strategist, is reputed to have coined the phrase “It’s the economy, stupid”.

Nowadays, that statement is better turned into a question- “Is it the economy, stupid?”

Consider these facts;

• In the United States, 11 million jobs were created under President Obama and two weeks ago, US unemployment feel to a 16 year low.

• Two million jobs were created in Britain between 2010 and 2015.

• The Eurozone has experienced 14 consecutive period of growth, job creation is at a nine year high and output growth is at a five year high.

This highlights the challenge the centre faces.

The new political order is that the cause and effect of a growing economy and political incumbency no longer applies.

Look at Denmark, for example, where an unemployment rate of less than 5% saw the far-right People’s Party almost double their support and win more than a fifth of the vote.

Austria came close to electing a far-right populist as President last year, despite dynamic economic growth there.

And the Democratic Party in the United States would point to the huge economic advancement of the last eight years and scratch their heads about their eviction from the White House.

These types of electoral outcomes are products of a new political dispensation where growth no longer automatically means healing and Governments cannot count on growth to secure a desired outcome at the ballot box.

We need to find a new way through.

That, however, will be difficult.

Consider the pointmade by David Goodhart in his recent book “The Road to Somewhere” when he talks about the concepts of “anywheres” and “somewheres”.

“Anywheres” are metropolitan, powerful in their field, mobile, well-educated and liberal.

“Somewheres” are on lower incomes, more conservative, with a stronger sense of place and put a higher value on homogeneity that it is becoming less common, particularly in our cities.

Goodhart says that the “anywheres” who occupy political office- and perhaps I am one of them- have “neither vigorously enough renewed their offering to the electorate nor shared their disillusionment”.

There has always, of course, been disillusionment in the body politic. But this is different.

It is different because it is not the outcome of the process that generates opposition or disappointment, but the process itself. It is the system.

The system of politics.

The system of finance.

The system of regulation.

Perhaps we should not be surprised and we are, in fact, merely experiencing the response to the systems failure that was the banking collapse of 2008 and 2009.

That economic calamity that befell us, it could be argued, has naturally led to a shaking of faith in the systems that caused it, rather than just anger at the outcome of the failure of those systems.

A disconnect has developed – and it is in this gap that populism has grown.

It is our job to reoccupy that territory.

IRISH POLITICS POST-CRISIS

The disconnect experienced in other countries is surely present here too.

The scale of the economic shock of 2008 and 2009- and the years of hardship that followed- had a deeply corrosive impact on Irish society.

People lost their jobs. Many people lost their homes. Many people lost hope.

In the eyes – and rhetoric- of some, the recession was created solely by the banks, aided by the political classes, who in turn were supported by the European Union which acted as a giant debt collecting agency on their behalf, seeking recompense from those who did nothing to cause the crash.

An intoxicating message for a tired and angry electorate.

That JD Vance quote I cited earlier- about haemorrhaging of hope- is appropriate. If the scepticism about institutions that he speaks of takes root, a consequence is that you do not feel the market economy and the democratic government can deliver for you.

And with that belief in mind, electoral choices open up.

That is partly why we woke up on June 24th last year to hear that 52% of British voters had chosen to leave the EU.

And it is why when I went to wake my kids up that same morning, I had the profound feeling that they would not, as I did, enjoy the same level of freedom, within the same social, political and economic institutions that I did growing up and into adulthood.

Nothing can be taken for granted.

That is how profound all this is.

WHAT IS TO BE DONE?

You may have come here this morning with a view on what could be done to stem the rise of populism.

I believe we need to listen, understand and change.

We are living through the post-Great Recession era, where our economy and society are healing but are not yet healed.

Many would question if small countries like Ireland have a place in this debate?

Are we not economic minnows to be thrown around like pin ball, bouncing from one globalised recession to the next?

Are we not powerless and bereft of economic self-determination in a globalised system?

I believe the contrary.

I believe we as a small country, we are open to globalisation- indeed, we are one of the most globalised nations on earth.

But we also enjoy a level of social cohesion and flexibility that allows us to respond to the ebb and flow of economic cycles.

And by adopting the rigorous fiscal discipline of recent years, we are now ready to invest further in what is called intangible infrastructure- health, education and policing- that help small countries like ours grow and act as a buffer from the uncertainties that globalisation can bring.

In Ireland in 2017, to be moderate is to be radical- and our tone should match that.

Our new Taoiseach is a case in point, and is often a lone voice for economic modernisation and openness amongst all the party leaders.

With that in mind, as centrists, our tone should also be as passionate as our opponents- because it is passion for our communities and our country that got us into politics in the first place and it is only with passion that we will defend our communities and our country in the years to come.

I might make a point on how we conduct politics.

The old adage in politics that “when you are explaining, you are losing”, is, in retrospect, a dangerous and corrosive one. Politics must be about explaining, about arguments, about complexity.

Do not trust a politician who can give you his or her pitch in the time it takes for the elevator to reach the ground floor.

Or in a single tweet.

Instead let us articulate policies, complex as they may be, based on a strong liberal centre, opposed to the extremes and the volatility they bring.

The new Taoiseach has said as much- he has articulated a vision where we will develop a new social contract while standing by the European Union and stating unequivocally that in this Republic, prejudice has no hold.

But let me be clear, we face a significant conundrum where we value stability but where that stability seems so difficult to achieve.

The great prize, then, is to rise above the populist noise, speak our truth, and win hearts and minds.

GETTING THE POLICY RIGHT

In designing and implementing a policy platform that will resonate, we must be clear that the stability we offer does not equate to the status quo or the absence of change.

Indeed, centrism is about changing everything for the better, while forgoing the stale conservatism of the extremes, both left and right.

The change we must offer must make a real difference to people’s lives.

Our new Taoiseach, Leo Varadkar made the point himself upon his election to the post – he will lead a Government of “the European centre” that eschews the old left-right divisions of the 1980s but delivers on the improving people’s lives.

And what does that “new European centre” mean?

It means investing in housing, so everyone has a place to call home, to lock the door behind themselves and to rest their head.

That is why our Government has an ambitious plan to get people out of emergency accommodation, fix the housing market and deliver social housing.

It means investing in public transport, easing the daily grind and protecting our planet.

That is why we have strengthened our Capital Plan, which now amounts to a €42 billion investment in areas like transport as well as many others, and why we will strengthen it further to equip us for the future.

It means invest in education, to equip all our citizens to be the best they can at what they want to do, whether that is a home maker, or a home builder.

That is why we have built in changes to demographics in our budgeting process to ensure that before we do anything else, we hire more teachers to educate the increased number of children of school-going age. And why we are talking to the higher education sector and to employers about how we can better fund the third level sector into the future.

It means investing in the forces of law and order, so that we are safe, and we feel that we are safe.

And it means investing in global development, helping the poorest countries in the world to rise out of poverty and the disease and disorder that it brings.

The nature of this investment is key- this is not about profligacy, but about targeted spending in the right way to get the right results.

On top of this investment, the new European centre means promoting

• rigourous regulation of our financial, legal and data systems,

• a tax code that rewards effort and

• an outward-looking foreign policy that welcomes trade, welcomes migration and welcomes cooperation – in stark contrast to many populist leaders on the right abroad and on the left here in Ireland.

As European centrists, we believe in the market but we believe in intervening in that market when needed to deliver the outcomes our citizens need and deserve.

So, we do not take growth for granted and we do not believe that growth will always continue or always be fair if left only to the devices of the market.

Those are the policies that can again give hope and those are the policies that will change the political dynamic into the future.

CONCLUSION

Last weekend, the old big parties of the French political system – the Socialist and the Republicans- received less than a quarter of the vote.

Change seems to be permanently embedded in our political make-up.

Responding to that change is our challenge and our duty.

The greatest danger we face is complacency that somehow these issues will go away, that ultimately everyone will “come to their senses” – for want of a better phrase- and the huge changes people are experiencing in their lives, in their careers, in the social interaction they have with their partners, their families and their friends, will not change the institutions in which we operate.

Indeed, it would be incredible if this were the case.

It would be incredible if the forces of deindustrialisation, of the digital revolution, of multiculturalism, left politics and polities went unaltered.

Where, perhaps, we have already been complacent is the inability of those of us in the political centre to match the passion of non-mainstream politicians, especially as that non-mainstream passion is wrapped around false hope and dangerous ideas that will ultimately hurt the vulnerable people that populists claim to represent.

For Fine Gael, our party is at our best when we speak to the value of aspiration.

The same is true of our communities and families when we look to a future full of demands and opportunities.

Our moderate response to populism must be one that addresses the needs of all, that recognises the concerns of all and works for the benefit of all.

Let us remember the words of WB Yeats that “the best lack all conviction, while the worst are full of passionate intensity”, and find again the passionate tone that drove our political ancestors

• towards internationalism against the threat of war,

• towards freedom against the threat of tyranny and

• towards economic development against the threat of poverty.

We face challenges, but none that we cannot overcome with this in mind.

ENDS