Loyalty to the State

Monday July 23^rd 2012

There are mixed opinions about patriotism in English Literature. The ever faithful Boswell records a scathing comment from Samuel Johnson that ‘patriotism is the last refuge of the scoundrel’.

On the other hand, Sir Walter Scott penned some famous lines that were drummed into us at school in my days.

Breathes there the man, with soul so dead,
Who never to himself hath said,
This is my own, my native land?

Closer to home, our own Seamus Heaney, from a parish not that far from here, felt inspired, at the time of the Iraq invasion in 2004, to write his Burial at Thebes a modern version of the Antigone story.

Antigone is the rebel sister who is set to defy King Creon over his unjust decision to refuse an honorable burial to her brother.

The theme of the play is the conflict between individual freedom and oppressive actions by the State.

This is how Heaney describes it in a programme note for the Abbey.

“Creon puts it to the Chorus in these terms: Either you are a patriot, a loyal citizen, and regard Antigone as an enemy of the state because she does honor to her traitor brother, or else you yourselves are traitorous because you stand up for a woman who has broken the law and defied my authority. And Bush was using a similar strategy, asking, in effect: Are you in favor of state security or are you not? If you don’t support the eradication of this tyrant in Iraq and the threat he poses to the free world, you are on the wrong side in the war on terror.”

The State has always demanded loyalty from its citizens and keeps in reserve some exceptional powers to enforce that loyalty in a time of war or emergency. Margaret Thatcher notoriously claimed that there was no such thing as society, only individual men and women. Yet she went to war and demanded sacrifices from her fellow citizens to sustain that war in defense of a common purpose that had no direct connection to them as individuals but did arguably affect their common interest as a society.

If that particular Thatcher view is to hold sway then loyalty to the State is a voluntary decision. Some will put a religious belief and commitment to a religious affiliation as having a superior significance to any commitment to the State. During the 1951 Mother and Child controversy, many political leaders asserted that they were Catholics first and were thus obliged to obey the demands of the Bishops to withdraw the Noel Browne scheme.

For many years some religious leaders believed their internal legal codes held a greater legitimacy than the laws of the land. It is not all that long ago that one of our panelists here this evening felt obliged to remind them that Canon Law was no more relevant than the private rules of a social club.

I take the view that loyalty is something that a State requires to function effectively but it is also something akin to trust that needs to be earned by the institutions of the State on a continuing basis. In the period 1939 to 1945 the British State had to encourage and indeed compel tremendous sacrifices from the common people through food shortages and rations and the transfer of manufacturing capacity from consumer goods to war munitions. Fortunately, the leaders who sought these sacrifices recognized that there had to be a future dividend as a reward for the war efforts.

Thus, 70 years ago, the Beveridge Report sketched out how the State could develop a national insurance system to eliminate the five evils of want, ignorance, squalor, disease and idleness. This report became the charter of social rights that was to have a profound effect on public policy throughout the whole of Europe. Homes fit for heroes became the motto for an accelerated public housing policy while the ground breaking Butler Education Act in 1944 opened up educational opportunities in a way that totally transformed access to schools and universities.

With these measures, the British State rewarded society for the efforts made to fight off the external Nazi threats to its very existence.

In that way loyalty to the State was more than an abstract concept of patriotism, however much such patriotism was invoked and deeply felt in those turbulent years. A rousing St Crispin’s Day speech such as that delivered by Henry V on the eve of the Battle of Agincourt or the wartime rhetoric of Winston Churchill were never going to be enough to butter scarce parsnips in those war years. Quite rightly, the State felt compelled to go the extra mile to sustain and nurture loyalty and patriotism by clear demonstrations that it primarily existed to serve the people and needed to show what that meant in practice to social groups that had been excluded previously.

I take the view that similar efforts to nurture loyalty are required in every generation and never more so than in the age we live in when the resources of the State have been marshaled at enormous expense to salvage a financial system with truly horrific costs for the wider community.

Loyalty to the State takes various forms and a willingness to be compliant in taxation is one vital ingredient even if it done without enthusiasm. Taxation is what we pay to secure a civilized society, according to a famous American Supreme Court Judge Oliver Wendell Holmes, a remark that is now engraved on the wall of the US Revenue Headquarters.

In consequence, the State needs to be vigilant in maintaining a Tax Code that is just and seen to be just so it can command the confidence of the citizens who pay up. The comparatively low rate of corporate taxation does command general assent because the benefits it brings are evident in the range of outside companies that choose to locate here.

I fear some other aspects of our tax system fail to command a similar allegiance not least because of the many shelters that enable many very wealthy people escape paying the share of their income that is needed to finance the efforts of the State to provide world class educational, health and other public services. Personally, I cannot reconcile the lax rules on residence that facilitate tax exiles with any notion of loyalty to the State. Now, let me be clear that I am not an advocate of super high income tax rates. I accept that the combination of the current top rate with the universal social charge is a high burden but it is offset by far too many opportunities for some groups and individuals to escape the level of contribution that can reasonably be expected from those in their position.

There was a recent report in the Sunday Business Post of an elaborate offshore tax avoidance scheme concocted by tax advisors to facilitate 188 wealthy individuals which is, I think, indicative of the persistent efforts that are made to put income out of the reach of the tax authorities.

Earlier this year, I noted that US billionaire Warren Buffett was pointing to the injustice that the law allows him to pay a far lower tax rate than his secretary.

In short, the public morality, even among elites in many countries, expects a far higher level of tax compliance than we do here.

In this election year, there are new voices in American politics that have been making passionate arguments that nobody in America ever got rich on their own and that entrepreneurs and business people owe a lot to the societies in which their businesses thrive.

The Democratic Senate candidate Elizabeth Warren is one such voice.

“You built a factory out there? Good for you. But I want to be clear:

you moved your goods to market on the roads the rest of us paid for;

you hired workers the rest of us paid to educate;

you were safe in your factory because of police forces and fire forces that the rest of us paid for.

You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea?

God bless.

Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

In short, the extent to which we pay our taxes is a measure of our loyalty to our state, and the extent to which the state returns our commitment with quality services is the measure of the state’s loyalty to its citizens. These are the circumstances in which citizens and businesses thrive.

I come now to the question of persistent inequalities that, in my opinion, can fatally erode any sense of confidence among the general population that the State is acting in a way that seeks to sustain loyalty to itself and its institutions. There is a widespread perception that Government in the modern western world is of the wealthy 1%, by that 1% and for that 1%. It is hard to sustain loyalty to a national sovereign State which is heavily circumscribed by global forces in counteracting this trend to concentrate wealth and it will be even harder to promote a wider loyalty to new institutions that seem inevitable in a more integrated Europe.

I don’t buy the argument that inequality is something to be celebrated and that it has benign consequences. As wealthy people accumulate riches they invest and innovate, so it is claimed, leading to so called trickle down advantages for the whole of society. That claim is dubious to say the least. Those with immense wealth primarily seek to secure a monopoly position. They maintain their privileged positions internationally to capture an ever larger share of existing value while publicly financed research is as much a source of new products and innovations as anything developed by the super rich.

Throughout Europe and the United States wealth has become more concentrated than ever and this has been hugely negative in the way it has caused the alienation of many sections of the population. Greater inequality decreases opportunity and it distorts the economy. We lament every year the unwillingness of talented young people to study mathematics or science at advanced levels in our schools and universities. The damaging effect of this is well established but it is a trend that has become deeply embedded. I suspect the reason is not all that hard to see since the greatest financial rewards go to those who opt for the traditional sheltered professions and finance. Bonus points for mathematics pale into insignificance when compared to the bonus payments that feature in every headline.

In a divided society, those who are rich become indifferent to the public services that promote opportunity. They don’t want to contribute to public education, medical care or public amenities simply because they can buy all these things privately for themselves and in many instances are encouraged by the tax code to do exactly that.

How then can there be a common loyalty to the State when there are such divided loyalties on this key question of public wealth, the combined value of the services provided by the State?

I would like to touch briefly on political language and how it has been used over the past few years since the onset of our current predicament in a way that can only foster public cynicism.

In Orwell’s view,

political language is designed to make lies sound truthful and murder respectable.

Take the word inappropriate. It crops up often when yet another bank scandal is revealed.

Now there are times when that word is correctly used. I personally find the way some TDS dress in the Dail chamber to be inappropriate but that is their business. I need a different word to give expression to my feelings about tax evasion or the downright fraudulent practices that have come to light in numerous court cases of recent years. Fraud is a lot more than inappropriate, it is criminal, it is theft and it merits words that convey outrage and ignominy.

Disappointing is another mealy mouthed word that commonly features in political discourse. I am disappointed if a restaurant meal doesn’t live up to my expectations. I am disappointed if my team loses a match. But I need some other term when a prominent business person escapes penalty for lying and cheating through insider trading or if a different standard is applied to a corporate crime than to a social welfare fraud.

When the banking events of late 2008 occurred, it was revealed that one banker had engaged in very suspicious movements of funds to disguise his personal loans. A Minister went on Prime Time to say he was ‘disappointed’ by the behavior that had been revealed. Again, I need some other language to express the enormity of the breach of trust involved in this instance.

I have been struck over the years by the extent to which we in Ireland appear to tolerate lax corporate behaviour . No Ansbacher account holder ever went to jail and, to the extent that there was public opprobrium of those who held Ansbacher accounts, it tended to be short-lived.

Indeed, many of the business people who donned the green jersey during the boom years have shown an extraordinary lack of loyalty to the state in putting their private wealth beyond the reach of their creditors, even when those creditors include the ordinary taxpayers who have bailed out the financial system on which we all rely.

I am thinking in particular of some senior figures who have gone to extreme lengths to put their assets beyond the reach of the banks, many of them now totally state owned or heavily reliant on state support. There are some who comment negatively on an entitlement culture among people claiming welfare, but quite frankly I am struck by the sense of entitlement of people who want to maintain a millionaire lifestyle while leaving the ordinary citizen to pick up the tab for their reckless borrowing.

We should not debase the language of our political life. Issues that concern right and wrong, fraud and theft, crime and punishment merit description in terms that do not mitigate their impact.

When we soften our language in situations that suggest there is one law for corporate crime and a different one for routine theft or welfare fraud we become complicit with wrongdoing that corrodes trust and evokes suspicion in the bona fides of the State.

I take heart from some recent court decisions which suggest that we are finally beginning to take white collar crime seriously. The conviction and exemplary sentence in the Waterford corruption case is indicative of this.

I can assure you too the future will be different and this government will put in the hands of the judiciary plenty of legal weapons with which to deal with bribery and corruption allegations. My colleague

Minister Alan Shatter has a new Anti-Corruption Bill which is now out for consultation. This provides among other things that where a public official receives a payment in breach of a relevant code of ethics or discipline – in future this will be presumed to be a bribe.

Brendan Howlin’s Bill on lobbyists will also greatly strengthen the law and practice of public administration.

May I conclude by recalling the words of the German social philosopher Max Weber. In 1919 wrote as essay on Politics as a Vocation where he said that politics is ‘the slow boring of hard boards. It takes both passion and perspective’.

He meant that change comes in agonising increments. You try to move mountains and find it takes a lifetime.

Please keep that in mind when you judge what we are attempting to do in extraordinarily difficult circumstances.