The Budget in April is going to be both the severest ever seen, and… er… maybe not so severe as foreseen. Or maybe it could be too severe and damage growth. Fancy that! March 16, 2009
Posted by WorldbyStorm in Economics, Economy, Irish Politics.trackback
If one is confused by the noises emanating from the media on the Budget, don’t worry. That’s perfectly reasonable. Because there is no end of divergence about the severity of the Budget and the outcomes from that severity. Read Stephen Collins on Saturday in the Irish Times and you’ll be told:
The only way that the State’s solvency and its ability to function can be guaranteed is if the April 7th budget cuts deep into the level of public spending and raises significantly more tax to plug the yawning gap between income and expenditure. The tragedy is that the Coalition’s authority was severely weakened by the budget decision on medical cards for the over-70s last October.
And…
The situation is now so bad that Cowen and his colleagues have nothing left to lose by going for broke and bringing in the toughest budget in living memory.
And:
In the Dáil during the week Cowen had the appearance of a man resigned to doing what is required. While the hysterical reaction to the October budget doesn’t give him any great grounds for optimism about the electorate’s ability to understand its own interests, in the short term Fianna Fáil’s best option is still to do what is necessary and hope for the best. In any case, there is no other choice.
Is there really?
Read Pat Leahy in the Sunday Business Post – and for my money both he and that newspaper, whatever one may think of their overall ideological and economic position are a must-read – and the story is altogether less clear:
Fears that massive budget cuts in public spending and steep tax increases could prompt a further slowdown in economic activity are likely to lessen the severity of next month’s emergency budget.
Ministers and officials are worried that taking too much money out of the economy could further depress demand, leading to lower tax receipts and worsening the economic crisis.
And…
These concerns could lead to a further expansion in borrowing this year, beyond the €20 billion already anticipated.
Oh.
Even Cliff Taylor on the inside pages is far from sanguine about the effects of the Budget arguing that:
Ironically, the criticism post budget could well focus on whether the government has actually gone that bit too far in raising taxes and cutting spending.
Why that is ironic, particularly since we’ve been told that those tools of fiscal policy are the only thing that will save the economy. And remember when we talk about spending in the context of his usage we’re really talking about spending on the public sector in all the multifarious ways that encompasses.
If it tries to raise billions through massive income tax hikes, there is a real risk that it will fail and, by doing so, will drive the economy even deeper into recession.
Raising taxes and cutting spending both take cash out of the economy and depress activity, in the short-term at least. In the longer term, of course, having a credible policy builds confidence and sets a platform for growth.
But there won’t be a longer term if we screw up the economy, or more specifically economic activity, in the short to medium term.
Read Colm Keena in the Irish Times today and yet further confusion – or what I like to call complexity – enters the equation.
If we try to fill the hole between the January plan and the end of February revision we need to get €4 billion plus from harsh tax increases and harsh expenditure cuts.
That sounds bad but in fact the situation is worse. When you suck €4 billion out of an economy it has a contracting effect. Because the economy shrinks you get less than you targeted. So to get €4 billion you aim for above €4 billion.
And even more intriguingly:
This is something the department seems to have overlooked in February when bringing in the public sector pension levy and other measures aimed at raising/saving €2 billion.
Overlooked? Surely not… In a context where the media, economic commentators and others were baying for blood – or money – somehow that particular aspect of this got lost in the mix. Which is odd, because both here on the CLR and at the Irish Left Review and Notes on the Front a number of people have been arguing strenuously against the sort of precipitate cuts that Stephen Collins et all envisage.
Indeed one could argue from reading the comments above that Brian Cowen ‘going for broke’ might just break the country.
And Keena makes a further point that seems also to have been forgotten:
The idea is complicated by the fact that people may have already begun cutting back, in anticipation of what is to come, and so when the cuts come the contracting effect may not be as big as it would otherwise be.
Anecdotal evidence… no wait, not just anecdotal, the data from retail sales is very clear, demonstrates precisely this point, that consumption and expenditure is down. But hey, throw in the ‘harshest budget’ on record and no doubt against all logic and rationality consumption and demand will rise again.
Won’t they?
Patently not. One of the most lamentable aspects of this ‘debate’ has been the way it has been conducted in soundbites where ‘pain’ is something that only the public can and should feel and proposed options are entirely without negative economic consequence. But any of us with half a head and even the vaguest sense of economics know that if money is taken out of the economy it is more than likely that economic activity will fall. And this, naturally, is why in the US and the UK fiscal stimulus is all the rage to the point that those governments have either started or are considering previously unheard of measures such as quantitative easing.
But here, locked into our twin crises of a financial sector that has conducted itself ruinously and a tax base that has been entirely inappropriate for the state this nation faces, such thoughts have been anathema, and the posited solutions have been back of the envelope ideological reductionist stuff. And it is difficult not to be profoundly cynical at the nature of the discourse because many of those proposing such ‘solutions’ are aware of how thin they are and that their outcomes will near inevitably worsen our plight. Perhaps their rhetoric was used because they thought it necessary to arrive at a consensus on something that would be nearly right (in all senses of the term). But as the dust clears its possible to see just how potentially incorrect the policies they currently champion will be.
And this is something that David McWilliams notes in a thoughtful piece where he argues that the emphasis in policy terms is wrongly on short term change in the face of cyclical events and entirely ignores how we should reposition the ship to account for the inevitable upturn:
This is why it is depressing to hear the uniformity of opinion backing the government’s emergency budget proposal. When the mainstream economic profession, the Department of Finance mandarins and the commentariat are foursquare behind any idea, it is time to worry.
Remember, none of these guys in the mid-2000s saw the bust coming and, possibly more to the point, back in the mid-1990s, none of them predicted the boom, so why trust them now?
Why indeed? Their track record is far from exemplary, the policies they championed previously are shown to have been a bust leading us to this very spot.
McWilliams argues that:
Cutting wildly now and raising taxes simultaneously is not the answer. In fact, this will precipitate another fiscal crisis – and another and another. Ireland’s problem is one of liquidity, and this is a short-term dilemma in a monetary union.
As this column argued last week, some time in the next few years, this problem will right itself, either through a Euro-wide bond issuance, a national recovery bond or through the international cycle playing out its course. We simply need to think clearly and stop behaving like accountants, terrified by the tyranny of the balance sheet.
And add to that some thoughts that Michael Taft raises today on Notes on the Front and at the Irish Left Review…
There is one sentence, not elaborated on, that appears in the Ulster Bank report:
‘. . . the likelihood of a significant fiscal contraction between now and 2013 – with the Government taking about 2 percentage points out of the economy each year – adds to the negative influences and pushes out the timing and extent of the eventual recovery.’
Taking out? Adding to negative influences? Pushes out? So what would happen if the Government put 2 percentage points back into the economy? We don’t get those calculations because the orthodoxy slaps down anyone bold enough to suggest stimulus.
Keena makes a final point that to me is at the heart of this matter, current crises set aside.
The next few years will be a grim period in the economic history of the State but could be a good time to at last debate what level of public services people want the State to provide, and how we should pay for them.
That is the vital terrain on which this must be fought… because counter-intuitively this environment offers an opportunity for a rebalancing of the feasible with the optimal. The language we are hearing doesn’t give cause for optimism. At best we look as if we are going headlong towards a two tier society where universal benefits in health, welfare and education are replaced by means testing. I can’t think of anything more destructive to a society and a polity. I also can’t think of anything less egalitarian. The left has be out there arguing that general taxation should pay for general provision of benefits free at point of access and that for that to occur all the nonsense about lower taxes (a game that the Labour Party indulged in at the last election but thankfully appears to have rowed back from in more recent times. Sinn Féin to their credit were less inclined to join that particular bonfire of logic – although there were wobbles and unnecessary ‘compromises’. The Green Party, to their credit, has long argued for increased taxation but, and this is less creditable, only for very specific ends) that there genuinely is no such thing as a free lunch. If we want world class services we must pay for them and pay for them out of general taxation.
It is that simple, but that requires the debate is framed very carefully indeed.
I don’t buy this idea we just have to wait for the upturn. Over 8% of tax revenues during the good times came from property taxes as far as I recall. Construction contributed to 15% of the economy. Thats gone and isn’t (nor shouldn’t) come back. The skeleton welfare state that we’ve “enjoyed” over the last few years has been funded by bubble taxes that I see no feasible way of replacing.
Just look at the graphs here (http://www.irisheconomy.ie/index.php/2009/03/04/both-tax-and-spending-need-attention/). The divergence is massive and we have no hope of plugging it without severely contracting the economy.
This necessitates a combination of cuts and taxes, unless someone can point to where in the medium future we are going to find boomier times. I really don’t see it. The construction was domestic lead and can’t be replaced domestically top the scale required. If we’re to replace it with export lead growth, we need to (a) find where that sector will be and (b) have competitive prices. If it can be found anywhere (which I think is unlikely – financial services aren’t going anywhere soon and Ireland’s tech expertise is weak. Most IT gradates have barely even heard of linux!) it will be in some service related sector. Wages are a massive part of the service sector’s costs and so that sounds like bad news there. Even more importantly, where are we going to export to in a global recession? Germany’s exports have collapsed. Exports around the world are collapsing. Who’s buying?
Added to this is that we have to worry about financing. Whatever about our national debt ratio only being 40% or so now, its the trends that count. Unless the markets see “pain” (being pathologically orientated) and the differential between taxes and spending put on a sustainable trend path, we’re fooked. Fiscal stimulus that increases borrowing isn’t exactly doing that.
I don’t see how anyone can realistically argue that Ireland is somehow capable of putting in place a fiscal stimulus package. The trend is what matters. Even if we overcome barrier 2 – the borrowing block – I don’t see how we can replace the gaping structural hole in the economy with anything. This is a structural adjustment. Its going to be painful but its what happens when you have a boom built on rocky foundations.
Hopefully I’m to pessimistic but I don’t think so.
ps I’ve said this before but I’m coming from a progressive viewpoint but think that you have to accept constraints imposed on you. We’re Ireland. Our significance is Birmingham – not Boston or Berlin.
Stephen Collins is a PD. His editor is a PD ex-TD. To suggest any approach other than slashing services would be to admit that they’ve been wrong for twenty-five years.
barratree, some very useful points, although not entirely addressing the point of how we can ameliorate what seems now to be an almost inevitable contraction. However if I can unpack them a little. I agree with you entirely on some aspects, the emphasis on construction was a distortion, or at least the emphasis on construction as part of the tax base in the way it was was. Far better by far to have banked that money for upcoming downturns and to have repositioned the rest of the tax base accordingly, and then, perhaps we might have avoided what you rightly consider a ‘skeleton’ welfare state.
However, whether things are quite as gloomy as you portray them is a little bit more open to question. I tend to think McWIlliams is correct in that this is a cyclical issue… and I’ll be few enough will disagree with that, although it’s eminently possible that the cycle will not, even should things improve in a year or two bring us back to the peak we have recently fallen from.
I agree too that significantly increased exports are clearly not going to happen in the short term, but that has to be something we’re ready for in the medium to long term. And all the greater necessity to ensure that policies address that.
And all of that said, it still doesn’t detract from the reality that the policies being currently pursued are precisely those that will cause further contraction. Already the social insurance fund is close to empty. And this is close to the start of the recession/depression. Slash welfare, cut spending and we’ll still have hundreds of thousands out of work depending on the state to see them right. Whatever happens across the next three years that will require even greater borrowing particularly as the figures increase and economic activity contracts. Whether this is a structural adjustment, probably so in part but also probably a direct result of short-termism across the last decade, doesn’t mean that we’re unable to do anything. As ever Michael Taft has positive suggestions as to how we can initiate a recovery for more on which see http://notesonthefront.typepad.com/politicaleconomy/2009/03/mark-conroy-who-kindly-posted-my-essay-towards-a-new-economic-narrative-on-indymedia-noted-my-comment-that-it-was-gro.html#more
And the suggestions he makes are crucial to us using public expenditure in such a way as to avoid simply funding societal stagnation with vast numbers on welfare but instead directing it in such a manner as to re-energise business/enterprise/economic activity (or most likely given the severity of the situation simply to keep the show on the road).
WbS,
I’ve been keeping up with M. Taft’s stuff and again I think there’s too much optimism on our ability to borrow. The pathological nature of the markets means they ain’t gonna lend to us unless they can see a way out. They don’t and won’t see increased welfare spending as a way out. Esp. given how jumpy they are at the moment. We aren’t going to be allowed run huge deficits. Taft hasn’t dealt with this. His response has been “we’re at low comparative European levels”. We are now but not on this trend. And the trend is what matters. There needs to be a stabilisation programme or at least expectations of stabilisation in order for borrowing to flow. And stabilisation means expenditure cuts given the unbridgeable gap in taxes:spending that I pointed too above.
If our exports aren’t going to increase in the short run; and we can’t fill he domestic void (I remain to be convinced otherwise – as much as I like the rhetoric of a green new deal insulation, I don’t feel its going to replace building completely or anything near it), why would the markets make a long term gamble?
The massive unemployment is going to continue because we had a structural imbalance with heavy leanings towards construction and tourism etc. I genuinely don’t think it can be reversed – and thats before the international constraints we are under apply.
Methinks the reason that I didn’t address how to ameliorate the almost inevitable contraction is because its inevitable and we can’t do much. Dark days ahead.
I would agree with you in some ways on the tone of the media coverage though. you’d nearly swear that the Irish Times wasn’t running two property supplements a week edited by auctioneers…. Or the berating of the politicians for not seeing it coming when they (for the most part) uncritically fanned the flames.
Again, I hope I’m wrong…. but…..
Those calling for stimulus seem unable to grasp a simple Keynesian point: when the gov. spends more than it takes in that is a stimulus.
Even if Lenihan manages to come up with e4bn. ‘savings’ the fiscal deficit will still be around 10% of GNP.
The Irish state is currently running the biggest fiscal stimulus in the world. Yet prices are falling, and unemployment, already in double digits, is rising at three time the rate in the U.S. The cost of borrowing for Ireland is already the highest in the Eurozone. And those friends of the money lenders,-the rating agencies-are already beginning to raise questions. So suggesting that Ireland should depart from ‘orthodoxy’, borrow more and thus stimulate the economy ignores Ireland’s economic reality.
The current economic orthodoxy, at least in the Anglosphere, is Keynesianism.
The real question is why such a massive fiscal stimulus is having no effect in Ireland. Clearly a major factor is Ireland’s over-valued exchange rate, over which it has no control. The dead wood of toxic debt in the banking system, fictitious or imaginary capital, is also impeding lending. And the gov. is unable to deal effectively with this matter, because its DNA is so intertwined with the banking/property sector that its unable to take the necessary steps. A similar situation in Japan kept that country’s economy stagnant throughout the 1990s.
The government response is to make war on the working class, depress wages and living standards, thus increasing the surplus available to placate international capital. For this purpose Lenihan has recruited an anti-worker economist, Alan Ahearne, a protege of Alan Greenspan.
How this crisis in Ireland’s political economy develops is unknown. But I just watched Joan Burton being interviewed by V. Browne, and it was pathetic. The Labour Party is not up to the opportunity presented. Perhaps some leadership will come from the unions.
Calling what is happening in the world’s economy ‘cyclical’ just doesn’t wash. The last time such a comparable downturn happened was 80 years ago. Before that 70 years.
Waiting for the ‘cycle’ to end and for Ireland then to be ready, waiting for the moolah to descend, is a sort of cargo-cult economics.
@cl Again whats with the Alan Ahearne bashing? He was a very high level researcher in the US fed reserve on international economics if I’m not mistaken. Greenspan’s political ideology is unique steming from Ann Rand. have you even read what Alan Ahearne has been saying? To say Ahearne is in the ilk of Greenspan shows (a) idiocy; (b) you enjoy very odd attempts at winding people (in particular me) up.
Ahearne was one of the few voices of sanity during the boom years. And what exactly does anti-worker economist mean? This is the type of bull which really gets to me. At least economists can articulate intelligently their points, backing it up with some degree of evidence. Large chunks of the left respond by shouting mantra after mantra without reacting to the context of the situation. Among the first to call for tax increases were the lot on irisheconomy.ie : the constant refrains that somehow they’re inherently anti-worker and right wing is empty rhetoric and nothing else.
The reason I’m singling out chunks of the left is that we should expect more. Its weak and pathetic when the left – who have arguments that are a hundred times better – simply to devolves into refrains of incoherent reactionary rubbish that we would expect from CNN. While I disagree with Taft, his articles have upped the ante in the quality of comment on the general left/progressive side.
To end rant, can all rhetorical and empty cries of neo-liberal this, anti-worker that please stop. It hurts and irritates my sensitive sensitive mind.
Some evidence:
-Mr Wills said Dr Ahearne had been advising “some of the most rabidly anti-union employers in the country in sectors such as construction and electrical contracting on how to squeeze more out of their workers.
“In fact he appeared as an expert witness for employers in the electrical contracting industry last January, where he supported their application to the Labour Court to have the Registered Employment Agreement for the sector cancelled,” he said
http://www.irishtimes.com/newspaper/breaking/2009/0315/breaking9.htm
Here’s a nice picture of Dr. Ahearne. With a portrait of Ayn Rand’s most prominent disciple, and close friend, Alan Greenspan, given a place of honour on the wall behind him.
http://www.independent.ie/education/features/economics-prof-predicts-a-boom-1660208.html
Dr. Ahearne is probably a very nice, polite man: but that’ not the point. By inclination, training and current activity he is clearly an exponent of out-moded, right-wing economic philosophy, and an enemy of the interests of the working class.
Barratree – the argument against cuts in Government consumption / investment and increases in general taxation is based on the contention that such deflationary policies will make it even more difficult to close the budget gap as they will drive up social welfare costs and narrow the tax base even further (that’s why every industrialised country in the world is not doing it). Only by, first, halting the economic slide and then getting us back to growth faster, can we hope to close the fiscal gap. Yes, the deficit is to a great extent structural. But that doesn’t change the deflationary dynamic, it only points to the limitations of a cyclical upside.
Also, it’s not about being optimistic about our ability to borrow. It’s that we have considerable resources at our ready. We have €20 billion in cash balance, courtesy of the NTMA’s borrowing raid last year. We also have approximately €15 billion in our sovereign wealth fund – the Pension Reserve Fund. This is money in the hand that could be used for stimulus purposes. And, yes, as it happens I am optimistic about our ability to borrow – especially if the correct policies were pursued. In any event, the NTMA has already borrowed 40% of our needs for 2009 – in the first few weeks of the year. So successful were they, they had to turn investors away – and they were doing this even though we were being lectured by experts that investors were ready to freeze us out.
There is one thing that will give both foreign and domestic investors pause – an economy that is heading towards a depression with a 300% contingent liability hanging around its neck. So, we have to work these problems. Deflationary policies won’t do for either – especially as our banking system is in a massive deleveraging crisis.
WBS has rightly pointed to the recent hesitations among commentators who could hardly be considered reflationists. It’s as if, late in the day, they realised they were discussing an economy and not an accountant’s ledger. This hesitation should be an opportunity for progressives.
CL, let’s say a government with an historical balanced budget decides to slash taxes on property-related income and capital. Let’s further say that the tax benefit is shipped out of the country to invest in commercial property abroad. Now the Government, if they don’t take corrective action, must borrow to make up for that revenue they gave away. Is that Keynesian? No. Is that what the Government did? Yes, among other things. Resorting to borrowing, rather than increasing general taxes and cutting public spending, could be argued to be fiscally ‘deflation-neutral’. However, if the economy is in deflation and the Government does nothing to address, it is complicit with that deflation. Deflation-avoidance at a fiscal level is not stimulus – which is an active, interventionist, goal-oriented strategy.
And BTW, I agree this is more than just a cyclical issue. On the other side of the recession we cannot return to an economy over-reliant on property or FDI; an economy saddled with a low-tax, low-spend model with a poor indigenous enterprise base. Working through cyclical policies will have to be complemented by far-reaching structural reforms of our economic base. We will have to walk and chew bubble gum at the same time.
Sorry, getting back to this after a couple of things. I’m concerned that you place far too much emphasis on the trend barratree… incidentally, I wasn’t arguing about borrowing for welfare, quite the opposite, I can think of little more wasteful than that, instead I’d be looking at programmes to retain and enhance employment rather than have people subsisting on state welfare.
Again, I agree entirely about the green ‘new deal’. It’s a great idea but a moments perusal of grants for insulation/solar energy etc indicates that it is something that only those who are on very comfortable incomes can countenance, grants and all.
What you do seem to appear pessimistic about is the capacity of the state itself to assist in this. You’re right, there are international constraints, although notable by its absence to this point is what the EU will have to do in order to stabilise the situation across the eurozone (something McWilliams touches on, but perhaps a bit too optimistically). But there are instruments the state can bring to bear which can ameliorate the situation, even if the contraction is as severe as you suggest.
I would argue that the sort of near apocalyptic contraction you think is about to happen is of a scale that might indeed generate societal dislocations sufficient to seriously shake this state. I think that realistically, neither the Irish political system, or that of Europe is likely to allow that if they can avoid it, which means there’s a lot more pragmatism yet to be seen from both points.
I should add that I’m also certain Ahearne is a good person and his thoughts have been insightful and useful. And I’ve no doubt he’s no Objectivist. But he would appear to have more rather than less orthodox tendencies. That is absolutely valid but in this situation I wonder is it of as much utility as it might have been say five years ago.
Even a balanced budget can have stimulatory effect if those taxed have a lower propensity to spend than those on whom the gov. spends the revenue.
But the basic point cannot be denied that Ireland is running a massive fiscal deficit which in Keynesian terms is a massive stimulus. And yet the economy is clearly in a severely deflationary situation with the pace of unemployment growth greater than that of the rate in the U.S. in the early 1930s. Why is the stimulus not having an effect? One cannot sensibly discuss this deflation while ignoring the exchange rate and the peculiar Irish gombeen political economy which has created zombie banks.
The e15bn in the Pension Reserve Fund is not cash on hand. Its invested and now would not be a good time to cash in. The e20bn cash on hand at NTMA it seems is protection against inability to borrow, as well as meeting short term fluctations in revenue. But it does seem high.
The coming budget is an opportunity to redistribute income: from those with a lower propensity to spend,-the well-to-do,-to those with a higher propensity to spend-those with lower incomes. This would countervail to some extent the additional contraction which reducing the deficit implies.
I don’t know if Lenihan’s new economic adviser is an Objectivist or not. I doubt it. But he has spent 7 years working for Greenspan. His attacks on the working class I have outlined above. He is a neo-classical economist with impeccable academic credentials. He is steeped in this right-wing economic philosophy. Thus he has to a highly developed degree what that great enemy of economic orthodoxy, Thorstein Veblen, called a ‘trained incapacity’: his ideological blinkers will seriously curtail his efforts to rescue the political economy from the bind his employers have put it in.
Will the inevitable suffering and discontent force a real alternative?
hmm… Two articles I read today relevant to the question of Europe intervening, focused on the lack of response so far. The very fair point by Krugman is that Europe’s political institutions haven’t evolved to cope with the economic integration. Will it?
Krugman
http://www.nytimes.com/2009/03/16/opinion/16krugman.html?_r=1
Munchau
http://www.eurointelligence.com/article.581+M5b19f04dbe8.0.html
@Michael Taft. Seeing as its far past a reasonable time (esp given its exam season) I must be brief but my general point is this in regards to expenditure cuts. There is no getting back to previous growth or revenue levels for the foreseeable future. That was unsustainable and fueled by an asset bubble in the later half of the boom (2001 on). The widening of the spreads in the bond markets is relevant because it shows that for the first time in the short history of monetary union the markets are really begining to differentiate between perceived risk. Yes – a large part of the reason is that the liabilities of the banks lie on the state but also that they don’t think we’ll get back to growth.
How do we bridge the gap between expenditure and revenue? I don’t see where the growth is going to come from. Without a sustainable trend path we cannot (nor should not) borrow.
@WbS: What do we retrain them to do? What domestic sector or export sector can take up the slack? An interesting aspect to all this will also be the migration patterns. There is much less of a safety valve then before in emigration given this is a pretty global recession.
Perhaps I’m reacting with undue negativity to the Tribune’s positive issue but I am utterly unconvinced of the idea that we just have to wait for the good times to come back.
Without wanting to minimise our differences on this barratree in a sense this is a question of emphasis, but the differing emphases are quite distinct (although it is great to be able to air them in this sort of a way).
I take Krugman’s point, but… it is precisely in the sort of crisis which would see a national economy collapse that one presumes that the EU would have to effect some sort of recovery – and I don’t dismiss the thought that that could be painful.
As regards retraining, that’s a very fair question, but… we’re not the first economy to have to deal with recession/depression in history or the first to have to contemplate some sort of state prodded employment/training programmes introduced or extended to defray the social costs of mass unemployment. It does appear, and again here I agree with you, that we’re looking at bad and least worst options across the board, but even that allows for some navigation by the state (and I take your point that the fundamental nature of say bond markets is changing under these crises which means that the environment we blithely operated in a year ago is now very different indeed). It’s very depressing to hear emigration mentioned again. Which leads me to the following more general thought.
I do think that the overall issue you point to does raise significant questions as to what sort of state this is. If the very best we can do is not even approach running the ‘skeleton’ welfare state we had for the last while, and I’m hugely critical of the nature of that state and how partial in terms of implementation it was, then one has to wonder how we believe we can operate as a sovereign independent entity that has any regards for its people. If we simply can’t, as you propose, deal with the economic crises in any fashion other than one which piles misery upon misery then the question becomes what is the purpose of the exercise?
[...] The Budget in April is going to be both the severest ever seen … [...]
Ireland is not a ‘sovereign independent entity’. It has no control over its exchange rate, its rate of interest nor its money supply. Its in thrall to international capital.
-A department of finance spokesman told the Sunday Independent: “The reason that we have decided to continue with the payments into the fund is because the international credit agencies look very favourable on such a course of action…
Senior sources within the Department of Finance have insisted that by investing in the fund, Ireland is showing the world its commitment to fiscal rectitude and its aim is to impress international investors.-
http://www.independent.ie/national-news/tax-hikes-will-be-used-to-finance–bailout-of-banks-1673392.html
The political response to the crisis of those in power is to attack the working class, attempt to placate international investors, and wait in cargo-cult fashion for the upturn in the mythical business cycle.
Such a policy is unworthy of a free, modern people,-but the mindset I suppose, is understandable as a post-colonial hangover.
Great patrician disdain on the face of Fergus Finlay last night as he referred to Ireland’s budget being dictated by ‘spotty’ investment analysts in international finance houses.