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Nevin Economic Research Institute April 12, 2012

Posted by WorldbyStorm in Economy, Irish Politics, The Left.
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Here’s something of some interest, and hat tip to Tomboktu for pointing it out. It’s the NERI – Nevin Economic Research Institute, an ICTU supported think tank and research organisation.

They’re initially arguing for measures within the orthodoxy, or at least in a way that doesn’t reverse it (in the sense that they seek measures that don’t add to the General Government Debt), but for all that their proposals cut across the logic of austerity and that is positive.

In this Quarterly Economic Observer an additional, frontloaded, targeted, strategic and temporary investment of €20 billion over five years is proposed – €15 billion in the Republic and €5 billion (=£4.2bn) in Northern Ireland – to begin to reverse the negative impacts of fiscal austerity. It is not suggested that this policy initiative would solve the problem of unemployment immediately or that it would secure full economic recovery. However, together with other policy measures, it would help to re-start domestic economic activity, meet vital long-term infrastructure needs, given people greater hope and make serious inroads into long-term, structural unemployment.
The funds for such a stimulus can be sourced from a mix of public, private and European/International sources with no additions to General Government Debt and with a likely lowering in the public sector deficit as a result of higher revenues and lower payments as a result of lower unemployment.

Given the paucity of economic analysis on the left in all areas, bar the obvious exceptions, it seems like an useful exercise.

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1. CL - April 13, 2012

15 billion invested in the Irish state over 5 yrs. That’s 3 billion a year. Total govt. debt is 120% of GDP, roughly 100 percent of GNP. Assuming an average interest rate of 6%, that’s 6 billion a year in interest, payable to the usual finance capital suspects. That’s twice
the Nevin Institute proposal, and will continue long after the 5 years. 3 billion a year for 5 years is paltry compared to 6 billion a year in perpetuity, or at least until the principal is paid off.

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2. CL - April 13, 2012

Just to amend the foregoing.
If GNP is around 130 billion euro, and total debt equal to 100 per cent of GNP, then at an annual interest rate of, say, 6 per cent somewhere between 7 and 8 billion euro per year is being paid in interest. The Nevin Institute’s 3 billion euro investment ‘stimulus’, each year for 5 years, will hardly be effective in countering this massive annual extraction of surplus value from Irish workers to the parasites of finance capital. And to extract this amount each year from the Irish economy domestic demand has to be suppressed. Hence the austerity policy of the IMF/FG/Labour govt.

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3. Tom Healy - April 14, 2012

Clearly, the NERI proposal is not a silver bullet. Neither does it entail a full social transformation. it is just the beginning – a very modest beginning – in halting, reversing, turning around the fiscal austerity drive. Further research is needed on putting up a ‘Plan B’ which can move beyond this initial reversal.

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