Interrogating Irish Policies Revisited

William Kingston

Issue 389, vol.98, Spring 2009

-     For several decades now, the wisdom of State interventionism has gone unchallenged. The damage is compounded by the fact that the country’s bureaucracy – whose ethos and competence could conceivably have been a counterweight to the politicians – has been emasculated by the doctrine of the ‘corporation sole’ (borrowed from the British system) : According to this, all actions by a government department are deemed to be those of an individual Minister, not of his agents – so that, wherever there is failure, the only technically ‘responsible’ person is the Minister. But in normal business practice, tasks can only be carried through successfully, if they are directed by people who will gain if they succeed or pay the price if they fail. (We see that where people have a real stake – such as a property right – in a country, that right makes self-interested action function in the service of the public interest). Democracy can work only to the extent that the power it gives to ‘numbers’ is balanced by ‘property’ (which is independent of the State).

-     The absence of due regulation in the banking sector has precipitated the country’s present troubles. Developers had virtually unlimited access to finance, because of an explosion of credit-creation in the outside world – ultimately attributable to the extension of the privilege of ‘limited liability’ to banking (so enabling bankers to underwrite excessive risk-taking). Originally, a bank’s shareholders – not its depositors – had to shoulder the total investment risk; but this proviso (a corollary of property-right) went by the board.

-     Perhaps the most important way in which the excessive protection of individual property rights in the Constitution contributed to the recent property bubble, was the use of this protection to prevent adoption of the Kenny Report on control of land prices : A key proposal of Kenny was that Local Authorities should be allowed to buy land for housing at its agricultural value plus a limited percentage.

-     Because there is tax freedom on patent royalties for inventions made here, on leaving Ireland an overseas firm can retain a few employees here for ‘Research And Development’, and route any amount of money through this as royalties – whether or not the inventions themselves actually earn anything at all. This pseudo R & D is no basis on which to try to build an economy, which can nowadays only be based on real R & D and innovation in indigenous industries.

 The devising of property laws to protect innovation directly – instead of protecting it indirectly as ‘intellectual property’ – just might be the catalyst for a new forward thrust in an economy.

On the broader general view, it would certainly seem that by continuing to underwrite rent-seeking as the norm for national business, the government has rendered an indigenous economy – based on genuine entrepreneurship – impossible : through rent-seeking, the country’s future is locked into the policies of the United States.

William Kingston lectures in the School of Business, Trinity College, Dublin.

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