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Column: Private debt is the millstone that holds back enterprise – and a better future

Debt write-off has always been part of the economic order. The establishment will resist it – as it always does – but the future of Ireland, dark or bright, will be determined on this battlefield, writes Ross Maguire.

Ross Maguire SC

THE PRESSURE IS now on and all over the country – ordinary people are being squeezed by banks, by the State in all its forms, and by countless other hungry creditors. And this is before a single cent is spent on the necessities of life or on a creative act of one sort or another.

This is a battle for the future of Ireland. The future will either be new and dynamic or the status quo will emerge stronger than before.

The idea of crisis implies the status quo has failed and crisis is supposed to herald in a new way of doing things, new ideas and new leadership. But in Ireland the status quo is fighting back with an unprecedented intensity. To win, the system knows that the new and the daring must be curtailed. So emigration and unemployment are the friends of the status quo because they weaken the creative and the innovators. The system may even support charity because it gives it the look of compassion. Navel-gazing and political intrigue are encouraged because they deflect attention to the peripheral and to the meaningless.

The hatchet fell on the private sector

The system began its defence by identifying an enemy and blaming it for the crisis. The personnel around the table on the fateful night of the guarantee in September 2008 were lawyers and civil servants – the doyens of the status quo. They realised that the system had failed but as its champions they decided to place the blame elsewhere. Banks would be saved, the political machine would remain largely untouched, and the civil service would continue to stand all powerful. The hatchet when it fell would fall on the entrepreneur, on the private sector, on those in our society who have the ability to dream and to embrace change.

True it is that many so-called entrepreneurs in the Celtic Tiger were local speculators whose contributions are ghost estates on the edge of towns. Even among the most professional of developers there was an ugly swagger and sickening arrogance. But this is not the full picture and those that have declared war against developers have done so out of self-interest only. Many of those in our community who would otherwise have been involved in other forms of enterprise became captivated by property. That is the shame of the Celtic Tiger – the missed opportunity. Some built wonderful infrastructure that will benefit Ireland for generations. Others were good business people who got caught in the hurricane. The key, though, is that many were entrepreneurs and some were even visionaries.

Dreams of entrepreneurs

Entrepreneurs and those who drive small- and medium-sized business in any community have vision and they take risk. They create and creativity is their contribution. Professional firms grow rich serving the projects dreamed up by these entrepreneurs. All the wealth created is subject to tax which then swells the State’s coffers so that health services can be run. The fact that the public health service is run inefficiently is not the fault of the private sector.

In Ireland today the system, to protect itself, blames the private sector for the ills of the past. If you have been self-employed and have fallen on hard times this is a truly awful society in which to live. The welfare system will reject you; the legal system will torture you; and when you move to improve your lot road blocks will be placed in your way such that only the very few can survive. And meanwhile emigration continues, unemployment continues, and official Ireland is alive and well and in full recovery.

A vibrant society is a free society where people are in control of their own lives and their own destinies. But the type of person who wants to shape his or her own destiny is a risk-taker, an adventurer, a non-conformist – and the status quo fears such people because they threaten the system. Ireland in 2020 will either by more stultifying than it is now or it will be free and that will depend on what happens over the coming few years.

Personal debt

The biggest and most immediate issue is how we deal with personal debt. It is a more important factor than public debt because private debt is the millstone that holds back enterprise and enterprise is the key to a better future. The debt is almost always property related. Whether it is the family home or investment property, the problem is all the same – debt that cannot and will not be repaid.

While banks have long since realised that this debt is never coming home they continue to enslave huge numbers in the name of public interest. At New Beginning we see on an everyday basis people who, if freed from unmanageable debt, could and would rebuild this broken country. Instead they are hounded by the State and its institutions and then we wonder why the economy has been in the doldrums since 2007!

The answer to our woes is fundamentally simple – debt must be written off and people returned to being solvent. Credit must be made available into the real economy at levels and rates that will allow commerce to start again. As this happens employment will increase and real prosperity can be established.

The future of Ireland will be determined on this battlefield

Waiting for government and banks is a waste of our precious time. People need to take control of the situation themselves, however hard that may be. Bankruptcy and Personal Insolvency will force the issue if we are brave enough to grasp the nettle. In bankruptcy all debts are written off immediately, giving the debtor the chance to begin again. In Personal Insolvency the majority of debt is written off so that the debtor can breathe and start a new life.

This is not rocket science. Debt write-off has been a part and parcel of the economic order since time began. The establishment will resist – as it always does – with the cry of moral hazard or whatever. But the future of Ireland, dark or bright, will be determined on this battlefield. Every citizen freed from excessive debt can herald a new venture and every new venture will bring employment and hope for the future.

The alternative is to allow our communities wither and die while government ministers applaud foreign visionaries who come here to take advantage of tax breaks and then repatriate profits home to lands where enterprise is valued.

Ross Maguire, Co-Founder at New Beginning.

Read: Thousands asked for help from insolvency service in its first months

Read: Iceland to write €24,000 off every household mortgage

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Ross Maguire SC

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