Banking, employment, pay scales and housing and industrial priorities are all changing radically, writes Tony Kinsella
I RECALL joking outside closing Merrion Row watering holes that we would, one night, emerge to discover that the revolution had happened and we wouldn't be able to recognise it.
Now we all face the daunting simultaneous tasks of recognising, analysing, taming and harnessing a profound, global and systemic revolution. A revolution that started as financial, has spilled over into the economic, is churning the social and becoming political. It is chaotic, manifesting itself differently and similarly all over the planet. It is anarchic in that it is capitalist, socialist, ecological and utterly ubiquitous.
Financial institutions, stock markets, and major industrial corporations lie in tatters. Governments oscillate between unconvincingly positive posturing and mimicking petrified rabbits mortally transfixed in the headlights of oncoming vehicles.
Our societies have demonstrated remarkable reactivity and quite extraordinary co-ordination in developing and deploying a plethora of guarantees, emergency capital transfusions, summits and economic stimulus packages. These have so far concentrated on preventing collapses and have largely succeeded in mitigating the storm. They might, with a bit of luck, get us to year's end.
In early 2009 we will have to make decisions about what we should rescue from the detritus, and what we need to replace.
Carlos Ghosn, the head of Renault-Nissan, said last week that his group could only access three-year financing at 8 per cent, a rate that made no sense for the auto industry. "The market is broken," was the blunter take of Sheila Blair, head of the US Federal Deposit Insurance Corporation.
Peter Mandelson reflected on the possibility of the UK government creating a new bank to supply business capital. If we're bailing out the banks, and they cannot or will not, discharge their basic functions, then our bail-out money will find a new channel.
We need to get our economies working again, producing essential goods and services and investing in our futures. Projects such as new electricity grids, universal access to high speed broadband, electrified rail systems and operational schools can all lay the basis for future economic development.
They have the added attraction of generating large numbers of semi-skilled jobs. Increasing the purchasing power of those on low incomes is an essential requirement for stimulating consumption. As governments become involved in boosting low pay, the political clamour to restore more equitable income ratios will become deafening.
In 1970, chief executives earned 40 times the average wage, by 2000 that ratio was over 1,000 to one. Much of that hike came from share-related income packages. Executives were actually rewarded for jeopardising the long-term viability of their companies by maximising short-term gains - think General Motors.
A generation of Greeks is in rebellion over €600-a-month salaries while low pay resentment is stirring across Europe. The phenomenon of the working poor is common to all developed economies, and just above that tranche lie millions who have watched their living standards slowly erode while pay for executives who ruined companies rocketed through the roof.
Political stability cannot survive such inequitable strains, particularly when a large part of employment will be publicly funded.
Fannie Mae, the US government-controlled mortgage finance company, stood conventional property logic on its head last week. When the US financial sector began offering free mortgages with boxes of breakfast cereal, thousands rushed to buy property to rent. Many of these mortgagors are now in trouble and in the traditional course of events Fannie Mae should foreclose and evict their tenants.
The company has, however, understood that having tenants paying it rent is a more attractive option than having thousands of unsaleable properties on its hands. Tenants who pay their rent will no longer be evicted, and the US government is becoming a national landlord.
One element of Germany's economic success has been its low level of owner-occupancy housing. Germans saved in banks rather than in bricks, and those banks developed long-term financial relationships with local companies. Might expenditure on housing become more a question of some place to live, and less one of speculative investment?
The car industry is in both deep crisis and fundamental mutation. Governments will have to choose between investing in rescues or in innovation. Renault-Nissan will launch their electric hybrid models in 2010. Carlos Ghosn reckons they will retail for about the price of today's 1.6 litre diesel models - without the lithium-ion battery pack. These packs, capable of powering the car for 160km between charges could add another €10,000 to the price tag.
The California based Project Better Place offers an innovative solution, based on mobile phone marketing. Clients signing a multi-annual contract with Better Place will be offered battery packs, chargers, and automated stations where a used pack can be replaced by a fully-charged one in three minutes for a small subscription. Better Place has raised $200 million and signed deals with Renault-Nissan, Honda, Mitsubishi, Subaru and the governments of Denmark, Israel and Japan.
The moment electric hybrids prove themselves, all other cars become redundant and their resale values plummet. Are we about to return to the car as a method of transportation rather than a status symbol?
Different banking, pay scales and employment patterns, housing and industrial priorities in a world where central banks are hurling caution to the wind collectively constitute revolutionary change.
Will we, like those bleary Merrion Row lefties, have a problem coming to terms with that? Possibly, but just like them, we have no choice.