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All the Christmases for the economic right are coming together this month… January 29, 2009

Posted by WorldbyStorm in Economics, Economy, Irish Politics, Uncategorized.
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Why bother doing any sort of analysis on this mornings offering in the Irish Times on the economy?

For another adds their voice to the chorus on public sector pay cuts. Mind you, this person can’t but admit that in his glee to eviscerate our public services and sector…

…The salient task is to show international investors that the monthly bleeding in public finances has been stemmed through measurable savings, even if small in the context of an annual deficit that would otherwise exceed €20 billion.

Think about it. The public finances can only contribute ‘small’ savings. And yet the energy in our media and amongst economic commentators directed towards this topic would make one think that they were the overwhelming component in the overall crisis.

But for him it’s not just the public sector that is there to operate as the sacrificial lamb to placate a ‘bond market [that] now wants… firm action from the Irish Government’.

Because…

…even a further 10 per cent cut on average from that level will not quite deliver the €2 billion as a result of payroll and consumption tax revenue forgone.

And who else should pay?

Not increasing social welfare rates will cover the remainder immediately. Those subsisting on welfare would still enjoy a substantial real hike in income if rates stayed at the 2008 level, because the Consumer Price Index will drop sharply this year.

That’s right. Not only can they take cuts, but due to the CPI they’ll live like princes! More or less. Less I think. Less. And the use of the word ‘enjoy’ – presumably entirely unconsciously – sends its own message about his appreciation of such matters.

And who is Rossa White to be dispensing such advice?

…chief economist at Davy Research, a division of Davy, the Dublin-based stockbroking, wealth management and financial advisory firm

Such chutzpah. Such shamelessness. Such callous indifference to the actual impact of the measures suggested on those who had no hand or part in generating the current circumstances.

One might think that in the context of a financial sector that has proven its innate uselessness over the past year and its utter dependence upon the state when it all goes sour, which let’s remember is you and me and our taxes, that people like Mr. White might soften their cough. Or remain quiet entirely.

Some hope.

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Comments»

1. CL - January 29, 2009

White’s piece is as fine an example of anti-working class prejudice ever to appear in an Irish newspaper.
And the other efforts telling us what needs to be done-reduce working class living standards-are in the same vein although not as crudely expressed.
While worker’s living standards are to be reduced, billions in the national pension fund,-the accumulated surplus of past work effort,-are to be transferred to those who created the economic debacle. This is Cowen’s next move once his talks with the ‘social partners’ preempt any protest by organized labour. For the unions to agree to any ‘give-backs’ is a major mistake.
Oh well at least there’s a general strike in France.

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2. WorldbyStorm - January 29, 2009

It certainly seems to display a remarkable ignorance of reality. This is just getting more and more nakedly apparent every day.

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3. CMK - January 29, 2009

This installment of “What is to be done?” has at least one golden virtue. It states absolutely explicitly, unequivocally who we are ultimately working for and who holds veto power over the economic viability of our state, society and economy. Two prize quotes from White:

“What the bond market now wants is firm action from the Irish Government”

“International observers, particularly potential investors in Irish government paper, won’t tolerate soft options”

So, there you have it, the bond markets and potential investors. I would have preferred “global capitalists” as it is both a truer and more accurate term, but that’s just a quibble.

None of this is news to socialists of those of us on the left. My god, they really are digging themselves deeper and deeper into a hole. No evidence, yet again, of any understanding that these prescriptions will have social or political ramifications. No-one is going to invest is a state wracked with industrial unrest and possibly worse. And yet the policies being demanded are heading in precisely the direction of widespread, for the 26 counties, social conflict.

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4. EWI - January 29, 2009

I saw a particularly large and splendid ’09 silver Beemer speeding along the quays the other day. Do you think that that might just have been our boy Rossa?

/snark

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5. WorldbyStorm - January 29, 2009

Very likely EWI.

CL…When you say that they have no understanding that these prescriptions will have social or political ramifications I think you’re absolutely right. They seem entirely oblivious to it, or dismissive of it. And that worries me no end either.

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6. D. J. P. O'Kane - January 29, 2009

Maybe they think the Guards and the Army will keep any social unrest under control.

Also, Irish society is so atomised, I can’t see anything like Greece and Iceland happening here.

As for the elite being divorced from reality, one thing that supports that point is the idea floating around that not only should the number of TDs be reduced, but STV should be replaced with a list system, so that ‘people like us’ can be parachuted into government. There may well be decent arguments for parliamentary and electoral reform here, but I can’t see anything that would upset the applecart for the various contending political machines making it through.

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7. sonofstan - January 29, 2009

Watching ‘The City Uncovered’ last night on BBC2 I was struck by a similar feeling. After spending most of the programme explaining accurately enough – to my ears – exactly why we are in this mess, and how a testoterone fuelled marked can abandon all rational constraint, and explaining exactly what the effects of this are and will be, Evan Davies, then, by stint of a still of a bread queue in the Soviet Union, and a silly mock up of himself as a Soviet planner, complacently concluded, like Churchill’s description of democracy, the ‘market was the worst possible system for setting prices apart from all the others’ and not, as you might of concluded from the previous 40 minutes, a monstrous, inhuman Golem….

The ‘TINA’ mantra goes on. And those of us with some grasp of an alternative are seen as throwbacks to a ‘failed’ ideology.

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8. D. J. P. O'Kane - January 29, 2009

Hey, Golems are cool. Don’t let Ms. Truehart see that post, ‘sonofstan’. Unlike the market, Golems actually *work* for their human masters.

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9. Crocodile - January 29, 2009

White’s essay is notable for not bothering to pretend that public employees have done valuable work, didn’t benefit much from the boom etc – before putting the boot in. He’s baldly honest that Ireland Inc must persuade the international financiers that the proles are well under control before they’ll do business.
White is very young and represents a generation that, as Sonofstan suggests, sees no alternative, having never worked, probably, with anybody who questioned the infallibility of the market. To this generation the slump can’t mean that the market is wrong, so there must be a way to blame the state. Isn’t that the only Reaganomic explanation left?
Note to Rossa White: Reagan was a US president when you were in nappies.

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10. sonofstan - January 29, 2009

Thanks, DJP – you’re right, lazy metaphor – ‘Zombie flesheater maybe?

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11. Tomaltach - January 29, 2009

Croc says that public employees have done valuable work, didn’t benefit much from the boom. Well like the vast bulk of workers across the economy, public sector workers didn’t make millions like the top 5 per cent or so who made incredible wealth. However, that is not to say the public sector worker “didn’t benefit much from the boom”. That is patently untrue. During the boom there was a sustained growth in wage levels in the public service. I know this will bring a barrage of fire, but public sector salaries now compare very well with those in the private sector (why shouldn’t they of course? but the fact is, before, they didn’t compare, now they do, thanks to the agreements, and benchmarking etc). Not only that, the public sector workers – like other tax payers – benefited from very generous tax cuts. As well as this there was unprecedented investment in areas such as health and universities. Compare the facilities in any hospital or university now with those of 10 years ago. And of course this is a benefit to those who work there. All told then, public sector workers did benefit very significantly from the boom. To say otherwise is deny the facts for sake of ideologically loaded rhetoric – precisely the charge against the right wing commentators.

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12. WorldbyStorm - January 29, 2009

Up to a point that’s fair enough. It is absolutely true that the public sector saw significant improvements during that period. But whether the salaries there compare very well with the private sector? I think that’s arguable and depends very much on what salaries we’re talking about. Michael Taft has some interesting data on that very issue.

The problematic aspect of this is a sense – and I know you don’t share it – that somehow public pay levels should be pushed down again, because? Well… because.

And that sense now undermines the very things that might have given the public sector some alllure despite lower wages… ie. reducing security, pensions, etc. That was essentially the tradeoff in the past. Now it’s going…

Moreover in some respects it is irrelevant in the broader scheme of things and certainly the debate that is going on in the media.

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13. CL - January 29, 2009

WBS: it was CMK who wrote that they have no” understanding that these prescriptions will have social or political ramifications”. In any case I’m in basic agreement.
Its also that given their doctrine, their ideology and their academic training they are the ones with no alternative. It was Veblen, I think, who called it a ‘trained incapacity’.
Their neo-classical economic model is a pure abstraction, and their policy prescriptions are an effort to impose this abstraction on recalcitrant, dialectical, human reality.
Their basic thrust is utopian.
The two great attempts to impose utopias on society in the 20th century ended in catastrophe and massive human misery.
To avoid a similar fate in the 21st, orthodox economics must be exposed and defeated.
We are witnessing its failure on a disastrous scale. Its practitioners offer nothing but tired dogma: a dogma which created the current crisis in political economy. So why should they be listened to when they propose reactionary, anti-working class solutions?

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14. Montevideo - January 30, 2009

White and his ilk are truly exposed for what they are, rabid anti-worker mouthpieces for the very people that are the primary cause of this mess. What is profoundly disturbing is the lack of rebuttal to this cosy cartel in our national media. They feel that constant repetition of this neo liberal mantra will split workers into public/private camps, the age old divide and conquer strategy. Will workers fall into the trap? Will the Gardai and Defence forces keep the peace with 10/20% less pay if the government imposes pay cuts and civil disobedience results? Interesting times….

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15. Joe - January 30, 2009

“Will the Gardai and Defence forces keep the peace with 10/20% less pay if the government imposes pay cuts and civil disobedience results?”

Will we get much civil disobedience? Maybe I’m having a glass half empty day but I get the sense from my public service work colleagues and fellow non-active union members that they will be willing to vote for any deal – any deal at all. They/we have been so softened up by all the stuff in the media, by the right wing barrage of anti-worker, anti-public sector guff that they/we will accept any deal.
The social democratic left is split between the Labour Party and the unions. The Labour Party is outside the tent pissing in. It needs to be up front with a list of reforms that it would implement. The unions are inside the tent and they have come up with a list of demands/suggestions. A partnership deal will include some of those and fudge others.
The Far Left will wait until an opportunity for a campaign against property tax or some such presents itself. But it won’t come up with any alternative that people could understand and support.
In short (rolls eyes), we are all doomed.

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16. Bartholomew - January 30, 2009

The piece of free-market dogma that struck me most was this, from an Irish times editorial of last Thursday week, about the nationalisation of Anglo-Irish:

‘While private sector ownership may have resulted in appalling errors of judgment and malpractice at the Irish banks, there is no reason to believe that public ownership will lead to a banking system that is any better run or more competitive’

The logic of this statement is that no matter how incompetent, how criminal, how irresponsible, how immoral, how cynical, private sector ownership could possibly be, public ownership cannot conceivably be any better. That is blind belief at its purest. (And even by their own standards, what’s competitive or well run about businesses that have to all intents and purposes gone bust?)

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17. WorldbyStorm - January 30, 2009

Yeah, it’s a totally ideological statement. But, are we surprised?

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18. WorldbyStorm - January 30, 2009

Joe, great analysis.

Sort of one those lines someone said to me the other day that the situation is that what point is there for Labour as a party when we’ve got SIPTU et al marching in to deal directly with government. It’s not the whole truth, but…

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19. stoatmusic - February 3, 2009

“… impact of the measures suggested on those who had no hand or part in generating the current circumstances.”

What has having a hand or part in generating the current circumstances go to do with anything? Who’s to blame isn’t relevant when it comes to finding the money to pay state employees, unless whoever’s to blame has so much money that we can plug the hole in the public finances by taking it off them

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20. Crocodile - February 3, 2009

What has having a hand or part in generating the current circumstances go to do with anything?
Justice?

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21. WorldbyStorm - February 3, 2009

stoatmusic, I’d go looking at the latest Michael Taft piece on Notes on the Front for some actual alternatives to the current policies pursued by this crisis.

But frankly, who is to blame is entirely relevant. The govt. is raiding the Pensions Fund to recapitalise the banking sector. They’re raiding salaries to plug the funding gap. I want to know who is to blame. I want to know who in order that they will understand that this set of circumstances must never happen again (not least because depressing wages will slow or even halt demand… not a great approach in a recession).

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22. Cormac-out-of-Stoat - February 4, 2009

“I want to know who is to blame. I want to know who in order that they will understand that this set of circumstances must never happen again”

Sorry, dude, I really don’t see how that understanding will help the govt pay their employees right now.

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23. Cormac-out-of-Stoat - February 4, 2009

Sorry, I’m stoatmusic from earlier, my cookies have gotten a bit mixed up

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