The article really wants to imply that because this worked, we shouldn't be afraid of "too big to fail", but it doesn't dare say that and kinda of ends up sitting between two chairs.
"I'm not saying that banks crashing isn't bad, but it wasn't a problem for Ireland to have banks disappear"
but the thing is, according to the article, trust in banks never disappeared, neither did the banks. People kept writing cheques against their bank accounts. There was a clear expectation that banks would open with all money intact and cheques would be processed.
That is a very different scenario from a bank failing.
50 years after the civil war, Ireland would not particularly keen to start up the random violence again.
I suspect everyone assumed normality would resume "tomorrow", for a lot of tomorrows. Which is the other reason you can't just start up the lynchings, this isn't America and you'll have to live with these people and their families on a comparatively small island.
>Which is the other reason you can't just start up the lynchings, this isn't America and you'll have to live with these people and their families on a comparatively small island.
By this logic neither the Troubles nor the Irish Civil War would never have occurred in the first place. Yet they did.
(And the latter was more fierce than the war that forced London to acknowledge the Republic's independence.)
Most people, presumably, aren’t as bloodthirsty as you; strikes, no matter how inconvenient, rarely result in mass murder of the strikers by the general public. Sometimes by the state, in totalitarian systems, but not by random people.
First of all bankers on strike isn't a normal strike. It's like parents going on strike and leaving their kids to die.
Think about it... I steal all of someones money and promise to pay them back later and they're just going to be nice about it? If this happened to a person... likely he will hunt me down and "extract" the money out of me through any means available.
Why? because typically survival depends on a persons' ability to spend money.
I am not bloodthirsty. Theft in any society typically results in extreme measures of punishment including forcefully kidnapping people and confining them in inhumane conditions (it's called prison). Additionally, when the "theft" involves survival, getting violent is a normal thing. This is not just a "totalitarian" measure.
What's going on here seems to be a social phenomenon because theft and a sketchy promise of repayment is essentially what happened. The only reason why the system remained stable was because people still accepted checks.
I mean would you accept an IOU as payment if you know the issuer essentially stole the money and won't return it when asked for it? Typically no.
As an Irish person, I would not _particularly_ recommend Ireland in 1970 as a model to aspire to.
And even given that, the banks did not actually fail, they just weren’t operating, and the expectation was that they would start back up again at some point. When Ireland actually faced the banks failing, in 2008, we bailed them out and nationalised most of them, at a cost of almost 10,000 euro per capita.
Arguably the only reason it worked out fine (for some value of fine) in the 1970’s was because everything being a shitshow was the generally accepted state of affairs, and for a lot of normal working people being paid cash was still normal.
For 21 minutes and 53 seconds, I highly recommend this video. It gives so much context and describes the situation in as neutral of a tone as it's possible with a sprinkle of dry humor. Also, Patrick takes it a step further by answering the question if something like this could work again as well as discuss how this system that emerged compares to modern day cryptocurrency systems.
Flagging this article for being too stupid to warrant reading. In 1970, nobody was afraid their savings disappeared; when a bank fails, people would lose their savings unless the government insures or rescues the bank.
Given the extremely low quality of this article, and given that the author is a finance editor rather than some freelance contributor to Business Insider, I very much hope that HN readers would stop upvoting submissions from Business Insider in the future.
> [...] almost the entire banking system of Ireland went on strike after an industrial dispute in 1970. The strike lasted nearly six months, yet the economy escaped unscathed.
Getting people to strike isn't trivial, but this is the first time I learn about bankers striking.
The banking system in 1970 was much more labor-intensive. This was before ATMs and online banking, or even computers — a small local bank in Ireland probably didn't have an IBM mainframe at that time.
So there were clerks and cashiers at every level pushing paper, crunching numbers, handling cash. These people were clearly working class, not the later Wall Street image conjured by the word "banker".
A perfect example of my favourite part of any "class warfare" talk. Even for the "capital" class, the system isn't necessarily in their favour. It's only when you're at the absolute peak that you get the benefits. Everyone else is perfectly disposable, society just runs smoother when society believes that 6 figure salaries puts someone on the other side of the fence.
The class divide isn't based around an arbitrary salary, or specific job positions. It's whether you have hire/fire powers and you make money off of other people's labour, rather than selling your own. Hollywood actors and famous football players are often very rich, but they sell their labor to get by. They don't own the means of production
> Hollywood actors and famous football players are often very rich, but they sell their labor to get by.
But there's a key difference. They don't need to continue to sell their labor, they can stop at any time and live on e.g. income from dividends. Or maybe they have enough cash they could literally not even invest it and still live fine.
Although they may not own the means of production right at this moment, they easily could at any moment, it's a choice.
Ironically it's more often governments that interfere with this. Go to the library and read some books and you can learn how to be a plumber or an electrician, buy a toolbox and you're on your way. Presumably there is some kind of licensing exam?
No, first you've got to find an existing tradesperson and apprentice under them, even if you could already pass the exam on your own. For a few weeks is it? Years, typically. To become a journeyman. Still can't work for yourself, now you have to work under them for a few more years.
Figure out how to file papers for an LLC. Maybe you need a lawyer. Tax accounting will be fun too. Do any of the cities you operate in have a different sales tax rate? Which of your business expenses can be deducted in the current year and which have to be depreciated? Is that the same for things you resell?
Guess what happens if you want to move to another state.
A hammer is a poor example of the means of production now that they're so easy to come by. The chokepoint is elsewhere.
A more relevant example would be influence over the information that people consult when they're deciding which carpenter to hire. You need both a hammer and a place to swing it that gets you paid--and nobody is trying to restrict access to hammers to protect their position.
This is why many of our most valuable companies are ad companies--you operate at a disadvantage unless you give them a cut of your profits.
It's whether you have hire/fire powers and you make money off of other people's labour
I think creating a hierarchy of managers and workers is just another tool that the people with power use to control everyone else.
Surely my direct manager has more in common with me than the CEO? Am I wrong to think this? Wouldn't the CEO see both managers and their teams as mere workers?
100% correct. That was the gist of my original point. In Corporate America, unless you're in the C-suite or sitting on the board, you're not in the club. The corporate ladder makes it seem as though the middle management levels are on the path to being upper class, but they're in the same position as everyone else. They just drive a nicer car while doing so.
Technically CEOs are also working class, since they mostly live off of their salary. A lot of this is voluntary, since with a bit less spending I'd imagine most BigCo CEOs could easily cope on capital income from the investments their salaries have afforded them. I wonder how that affects their classification...
I see the divide as being between those of us who created wealth by working vs. those who do not create wealth and instead play zero sum and negative sum games.
You could have someone who is solidly in the investment class and only works three hours a year, but during those three hours they tell their pet executives to put the capital into energy storage tech and new housing construction and do a lot of good in the world.
You could have a low-level white collar worker who isn't making very much money at all, all of it in wages, who decides to screw over the company's customers with something economically inefficient because it gives them some advantage in internal corporate politics.
Yes and no. The lines get blurry when you’re looking at doctors/plumbers/etc that own their practice. They are making money from their labor but they can also sell their company to someone else.
Major actors are really leveraging a brand not just selling their labor. Athletes have a similar dynamic where the very best compensated are making more from endorsements than playing football. And of course the richest examples all end up investing well.
They literally own the means of production, their bodies and minds. No one is forcing them to sign contracts for a million dollar salary, they can do the exact same acting/athelete-ing with a $100 smartphone.
Relax AI are now in the verge of evening the playing field for actors. Athletes not yet, unless we have AI starting to generate completely made up sporting events.
The later is extremely possible given how much data there is and how similar it all is.
A fair while back I was actually reading about a proposed system for literally CGI/virtual horse racing specifically for gambling purposes, backed by gambling industry money.
Unsure if it ever went anywhere, I kind of mentally filed it as “insane gambling nonsense”.
But the paying audience is got there through TV rights, TV building, comms infrastructure, stadium building and maintenance, ticketing services, etc etc. The footballer by himself has no paying job.
And so much of our society is bound by who you work for: medical insurance, social standing, etc.
And so many people just don't understand that there's really 4 classes: poverty, able to live, owner/landlord, royalty. (The USA has the politician class in place of royalty.)
Note I didn't say "middle class". That term originally was the constructed 'rich merchant non-royalty" class that was founded out of mercantilism into capitalism. The Middle Class is now the landlord and managerial class for most of the western countries.
But back to the topic, a Starbucks worker, a IT worker, a sex worker, and a MD all must sell their time and body to live. It's only when you start buying others labor/property cheaply and selling it expensively do you become a capitalist. Anything else, and youre just in the labor class.
The problem with this simplification is that it ignores risk. Being an employee means you get paid, and can change job it the business fails. Bring an owner/investor means you might lose all your money if the business fails. That is massive risk, and entirely ignored by the above characterisation.
The same apartments are getting 10 year tax abatements, because they are "good for business" aka trickle-down.
During the pandemic, pandemic "loans" were given to hundreds of businesses in the local area. And those loans were turned into grants (not have to pay back).
And landlords are usually smaller, but again, they're another reason why housing is stupid priced: it's common to see a rental of a home priced at mortgage+30% . The landlord gets their principal covered, keeps the property, and raises costs for everyone.
None of these apply to me or my family, sans the whole big $1200 relief check. I have no tax abatements, and pay taxes in full every paycheck and when I buy stuff. And local governments usually allow whatever by companies unless there's a big fuss. And, those corporate promises about hiring people or bringing in business? Yeah, not actually enforced.
And I didn't even discuss "too big to fail", fed govt propping up industries, and the like.
It’s uncommon in the US for reasons. It’s a thing in Europe.
1970 Ireland isn’t exactly an example of a modern or booming economy.
But… what happened there should give pause when financial bros get weepy and pat themselves on the back about their sacred duty to provide liquidity at all costs. (And take a vig)
Back in the 90s in Ireland, my mother would occasionally cash a cheque at the pub - if it's not crossed payee a/c only, the bearer can generally cash it themselves.
Going further back, pubs were the local shops for general dry goods, particularly in rural communities. I recall some dusty window displays in some pubs even in the 1980s, when I was a kid.
Recently I found that in a few of the more touristic areas in Ireland (which I rarely visit, being from here, was showing friends some places), a lot of pubs will offer a foreign exchange service of dubious legitimacy with debatably fair rates.
Same thing in the border counties up north - you can often spend or exchange Sterling and Euro currency, but the rates will suck.
In the 1990’s where I grew up, one of the two shops in the village was basically a room off one of the pubs. The other, larger shop was also the post office, hardware store, etc.
This is common in tourist-y areas everywhere. I was in Lisbon recently, and saw a number of places advertising that they accepted Sterling… at a rate of 1:1 with the Euro. A mere 15% FX fee.
What struck me as interesting is that one could do FX easily in a pub out in Blarney near the castle, while there’s not a single FX place in Cork City itself. Same thing in Galway - can’t find a FX place anywhere in the city, but if you head out to one of the tourist destinations you can do so at the pub.
You can’t do foreign exchange at a bank or credit union anymore without an account.
Most post offices will do it, I think. I bought dollar notes in one a while back without any difficulty. But yeah, it’s not really a business banks would want to be in; if you’re doing it honestly it’s not very profitable, and it can be quite… money-launder-y. Best bet for non-eurozone tourists would be to use a neobank (Revolut etc)/pseudo-bank (Wise etc) that offers fair FX rates, and then use an ATM.
(Somewhat rant, not really at you, just...What?) It's difficult to believe I'm even reading that. An institution that only deals with currency, and literally has almost no downside to accepting any customer for currency exchange ... won't accept currency exchange?
Most banks have far more resources that an FX stall to verify whether you're handing over junk.
There was a story last month about how banks are the only people left who can even determine whether "fake" Euro coins are fake because they're too high quality "fakes". Counterfeiters are cranking out magnetic, weight matching, material matching, currency that's nearly mint quality. And banks won't even do ForEx? People over in Eastern Europe have just given up. Don't even bother using banks, cause the banks will just tell you all the money's fake.
(TLDR; Feel free to ignore, this entire situation seems idiotic. Like humans just keep rushing towards dumb results.)
> and literally has almost no downside to accepting any customer for currency exchange
So, there are a few things going on. First of all, there are downsides; in particular, it’s a money laundering risk. But also, it’s logistically expensive; the bank has to keep a stock of foreign money, and occupy an actual human dealing with it, and, these days, the rates they can reasonably charge for it are pretty low.
If you’re looking for someone to blame for this, probably primarily blame the free market. Traditionally, banks did physical FX, at rates that were generally a horrendous ripoff, but all consumer FX was a horrendous ripoff so what were you going to do. Today, it’s possible for consumers to do FX with costs in the 0.5% range, lower for large amounts or if they pay upfront for Revolut’s premium plan or something. This doesn’t leave much margin for the banks if they want to be even vaguely competitive, so they’re only going to do it if it’s cheap to do. It is not cheap to do.
This is actually generally a positive outcome for most consumers; FX is much cheaper and more convenient than it used to be for more people; it’s only if you want to exchange physical money that it has become more difficult.
1970s Ireland was very homogenous, which is to say white. It wasn't until the 90s that immigration began flowing in the other direction to a meaningful degree. So while I agree with you, it was unlikely a problem at the time.
Although that doesn't cover gender or class discrimination so I suppose that was still an issue.
Oh, we absolutely still had discrimination, particularly against Travellers, but also there was very strong though largely unacknowledged classism. And then of course there were _women_; after a good start (Ireland was one of the first countries to grant equal universal suffrage), we spent the next few decades barely acknowledging that women were people.
However, in 1970, people here just weren’t all that ‘banked’; when I was a kid in the late 80s/early 90s, it was still fairly common for people to not have bank accounts, and certainly in 1970 postal savings accounts would have been more common than bank accounts. Today they’re ~universal (very few employers would consider paying by any means other than bank transfer) but it was a different story 50 years ago.
This is about the Republic of Ireland, where that wasn’t a huge factor (there was definitely some; comments in the newspapers from 1961 when Dublin got a Jewish mayor are eyebrow-raising, but it wouldn’t have been a huge issue for something like this). You’re thinking of Northern Ireland.
That said, as I’ve mentioned elsewhere, Ireland in 1970 certainly did have other forms of discrimination which would’ve been much more relevant here.
Interesting enough, one of Israel's presidents was an Irish Jew - Chaim Herzog [0]. If you listen to his speeches, you'd think you were listening to an announcer on RTE [1].
This has absolutely no bearing on the article and it's content.
That seems awfully harsh, the comment I replied to had done the usual "let's find some reason this is discriminatory" thing and I was pushing back on it. I'm happy to stop commenting.
It seems to me that your comment clearly broke the site guidelines and the GP comment clearly didn't. That's why I replied to the one and not the other. I also thought it best to note that we've already had to warn you repeatedly, and recently, to make sure that you have that information. I realize it sucks to get moderated, but this doesn't seem particularly harsh to me?
I don't want you to stop commenting! I'm just asking you to stick to HN's rules when you do.
Btw, there's a common bias that distorts basically everyone's judgment about this kind of thing (including mine, clearly): we underestimate our own harshness by, say, 10x, and overestimate the other's by another (say) 10x, and that compounds to a 100x distortion. I'd venture a guess that this is why your comment seemed to you like innocuous "pushing back", while it seemed to me like an obvious breaking of HN's rules. I don't know if that's helpful or not (probably not), but it's what came to mind.
While keeping something running via an informal system is better than nothing, and most people might be okay... if you're just kinda shifty looking or unpopular at the moment in your local pub and have a much harder time than everyone else, that's not exactly great.
That is, it's not only the common experience that matters, but the outliers too. The basic tools of society should be available even if you're ugly, annoying, or a minority.
This problem is far worse with a concentrated system than a decentralized one. If there are five local pubs and one of them won't have you, well, still four more. If there is only one bank and their loan officer doesn't like the cut of your jib, or their algorithm has decided to have a false positive, you're done.
Though of course the modern problem isn't that there is only one bank, it's that there is only one bank regulator which subjects all of the banks to the same incentives, and if those rule you out you're effectively prohibited from using a bank in another jurisdiction with different rules.
What you need for this is something permissionless.
Fun fact for you, a lot of pubs in the UK are shifting to requiring photo ID to enter, and scanning that ID into a centralised system, often as a requirement from the police to retain their license to serve alcohol.
I ended up chatting to one of the bouncers at a bar a while back and he was telling me about how they refused entry to someone not long before because they were flagged as having caused trouble in a bar 70 miles away.
In some regards I’m not even against this, if you have a record of attacking women in bars I don’t want you in the bar I’m at, but this does seem incredibly prone to abuse. I can totally see someone who has a grudge getting people banned from every pub in the country.
> This problem is far worse with a concentrated system than a decentralized one.
They can break in different ways. If you're in an out-group or unpopular, it's not clear whether you're better off with n local pubs making a decision to accept your money informally or n/2 national banks making a decision while subject to oversight.
In any case, this is a false premise: it's not like you're choosing from 5 local pubs. The question is whether the pub you attend likes you enough to take your check.
> What you need for this is something permissionless.
Far better to have things work okay without any other entity being involved, sure. But there are reasons why banks exist.
> If you're in an out-group or unpopular, it's not clear whether you're better off with n local pubs making a decision to accept your money informally or n/2 national banks making a decision while subject to oversight.
What is clear, however, is that you're better off with both systems existing in parallel because then you can use either one, rather than having the informal one prohibited by law so that you're forced into the other one whether it works for you or not.
> it's not like you're choosing from 5 local pubs. The question is whether the pub you attend likes you enough to take your check.
You are choosing from 5 local pubs. Even if you don't attend one regularly, it's in the same town. You could have mates there who vouch for you. Or you go to the pub of the person who wrote the check, they confirm that they actually wrote it and then it gets cashed on the basis of their standing rather than yours.
> Far better to have things work okay without any other entity being involved, sure. But there are reasons why banks exist.
You want a regulated and insured entity where you can safely store your money, sure. That doesn't explain why they should have a monopoly on various other aspects of finance though. Or why they would even need a monopoly on that -- if you want the assurances you get from a regulated bank, there they are. If you want a permissionless money transfer system that anybody can use and nobody can be refused, why shouldn't that exist too?
The link is extremely light on detail so in skeptical
1. What was the extent of the strike? Did salaries still get deposited? Did inter company transfer go through? Did exchanges stay open? Did lines of credit for businesses small and large stay open?
2. The whole "we knew who had money and we didn't deal with strangers" makes me suspect there's a whole other side of this particular story.
Lots of decisions in the last 50 years have made "the system" more fragile. This makes me realize that outsourcing trust is another one. This would never happen now because businesses have no connection to their customers, either a payment provider or credit bureau does the vouching which becomes meaningless when things don't operate as usual and human judgement is needed
"I'm not saying that banks crashing isn't bad, but it wasn't a problem for Ireland to have banks disappear"
but the thing is, according to the article, trust in banks never disappeared, neither did the banks. People kept writing cheques against their bank accounts. There was a clear expectation that banks would open with all money intact and cheques would be processed.
That is a very different scenario from a bank failing.