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Professor Philip Bourke asks 'Why was nothing done to avoid the present outcome?"

Date: 19 Apr 2009

Published: Sunday Independent Business

Author: Philip Bourke

"Looking forward to our pay packets at the end of May, the question is: how did we get here? How is it that respectable commentators have openly raised the real possibility of bankruptcy?

English-speaking countries are particularly prone to financial bubbles-normally property, but also stock market crashes.  Property crashes cause the most widespread difficulties for ordinary people because property bubbles are associated with excessive borrowing by, among others, ordinary people.
Given our property market over the last 10 years and the experience of other countries, trouble was likely. Why was nothing done to avoid the present outcome?

In our search for a scapegoat, the Regulator and bankers have been blamed. But the problem is much deeper and ongoing.
At the heart of our problems lie dysfunctional political, administrative, media and business classes.
Our political system encourages not independent thinking, but a drift to the centre – the ultimate example being Bertie Ahern. This tendency is exacerbated by an over-competitive media, focused on side issues in any debate of public significance. (Uniquely, the broadcast and print media of two countries compete in the Irish market, to the detriment of quality)
It’s worth noting that our bank regulation system- with the separation of Central Bank from Financial Regulator – is the result of controversy over relatively minor cases of bank overcharging.  Our business class, represented on bank boards, failed in their fundamental duty of controlling bank executives.

Our administrative class, who benefit from a lucrative ‘golden circle’ procedure of moving from one top job to another, lack the incentives to exercise independent thought so necessary in the sphere of economic and financial oversight.  If my analysis is correct, as a society we have difficulties in facing and articulating realities." 

Philip Bourke is professor of banking and finance at UCD Michael Smurfit Graduate Business School