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The Irish EU Presidency and after… January 31, 2013

Posted by WorldbyStorm in Economy, Irish Politics, The Left.

Wow. Reading Backroom in the Sunday Business Post this weekend was refreshing. No ifs and buts there, well not many. For Backroom the situation was worse and disimproving.

So s/he could in the course of a rather euro-sceptic piece note that in the context of the EU Presidency and Ireland:

It would be easy for our politicians – as they swan around Europe dealing with the political problems of a continent and enjoy five-star meals in five-star hotels on our behalf and at our expense – to become distracted from the mundane and grinding work of everyday retail politics back home.
What’s not to like for busy politicians in being cocooned in a secure space permeated by the compliance of civil servants and the flattery of fellow politicians? For everyone, the sojourn in Brussels offers a breather, far from the madding crowds of domestic political pressures.

And it’s true. Anyone who has observed the short space between the Merrion Hotel and Government buildings, and the journeys that EU reps and others make between those two points, will recognise the sheer detachment from the everyday that those represent. Indeed to live a life where that typifies ones interactions is to live a life starkly at odds with the reality for most citizens in any European state. That, as the SBP, notes it is all being paid for by ourselves is but a minor and somewhat ironic detail. But it’s one that is far too often forgotten.

I have to admit that the scenes from Davos this last week raise my hackles, as does the sight of government cars rushing through traffic, though it seems to me there’s somewhat less of that these days than there used to be – no doubt to salve the anger of the populace.

One can only imagine the sense of entitlement that that breeds. Not good. Not good at all. The following is on the money.

But back home, life goes on. Back home, the economy is still flat-lining and mortgage arrears continue to worsen. Sure, economic activity appears to have stabilised and may even be lifting. But the emphasis is on the word “may”. Back home are thorny political issues, such as legislating for medical abortion.

And this:

And back home is where the voters live.

They do indeed.

And there are ramifications from all this:

Recent opinion polls would suggest that the government parties have already lost one quarter of their support at the last general election. If political support continues to haemorrhage at that rate, the government parties could lose half of their support come the next general election.
That could cost Fine Gael and Labour 50 seats or more. Only a sustained economic recovery and a generous EU deal on our debts can save the government from this fate. But the prospect of each is quite uncertain.

As has been noted here before, there’s no guarantee even were those latter phenomena indicating recovery, of sorts, to manifest themselves that there would be a correlation with government polling figures. And as the news at the weekend suggests there’s less likelihood of that ‘generous EU deal’ now than there was when Backroom wrote the piece.

Backroom suggests that the Presidency may represent an high-water mark of sorts, after which the government will own what happens from here on out, whereas before it was still coasting on its initial popularity. Perhaps, but I think that the government began to lose that quite some while back, and it is the last eight months that were the transitional period from one state to another.

Moreover it is notable that Backroom doesn’t offer the government any advice as how to proceed. That may be sensible. It could well be that there is no advice that can help at this stage.

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1. ejh - January 31, 2013

In a way, it’s not the luxury that bothers me so much, it’s the isolation from other people’s experience. And I think this reflects a wider isolation, in so far as I think many commentators, economists and so on have very little idea of the practical effect of austerity on the lives of many other people. (Really, it is extraordinary that six million unemployed in Spain can be viewed as an unpleasant side-effect of otherwise effective policies, as opposed to absolute, stone-cold proof that those policies are a disaster. Extraordinary.)

I think sizeable inequality is bad for policy-making, never mind the ethical considerations for a moment.

LeftAtTheCross - January 31, 2013

“it is extraordinary that six million unemployed in Spain can be viewed as an unpleasant side-effect of otherwise effective policies, as opposed to absolute, stone-cold proof that those policies are a disaster.”

Does it not depend simply on the criteria by which success / failure are measured? In their excel spreadsheet these things are quantified in units of €. Everything else is meaningless. The societal side-effects will only become meaningful when they impact on the € amounts being measured in those spreadsheets.

The policies only exist in order to create wealth for the elite. As long as that’s happening then all is honky dory. The rest is just fluff and lip service.

LeftAtTheCross - January 31, 2013

Hunky dory, of course.

ejh - January 31, 2013

Does it not depend simply on the criteria by which success / failure are measured?

Well yes. That’s the point, I think.

Ed - January 31, 2013

Saw an economist on Sky News last night (he was just identified as a ‘European economist’), explaining that Spain had done wonderful things to address its ‘competitiveness issues’ in the last year or so, but the ‘tough fiscal retrenchment’ had an unfortunate impact on ‘levels of demand’. As if there was something surprising about the fact that mass unemployment which drives down wages will make people less likely to buy things, and as if there was no connection between the two.

ejh - January 31, 2013

Incidentally, I’m far from sure that claim about “competitiveness issues” is true even on its own terms. How, for instance, does making cuts in public sector wages and social spending mean that Spanish goods become better value in overseas markets compared to their competitors? I genuinely don’t see a direct connection.

Does it mean “they are doing things that we generally agree with”, or “we think these measures and mass unemployment will cause wages to fall which will make goods for export more competitive in the future”, or what?

CL - January 31, 2013

The latter. But reducing public expenditure on physical and social infrastructure,-including education and health.-reduces productivity; austerity reduces competitiveness.

ejh - January 31, 2013

The latter.

That’s what I think, but this does beg the question – has that actually helped competitiveness, or is this just an effect we are hoping will manifest itself in the future? Or at least it would beg that question, if it were actually asked of these people.

Ed - January 31, 2013

Yeah, I think ‘improving competitiveness’ just means wages have gone down. No proof is required that this actually does make Spanish exports more competitive, the link between the two is just an article of faith. In the same way, if the Spanish government had privatised half-a-dozen state-owned firms, he would have told us that the economy was now more efficient and productive. No actual evidence would be required, the change of ownership would be enough.

ejh - January 31, 2013

Yeah, I think ‘improving competitiveness’ just means wages have gone down.

Thing is, I’m far from sure that they have, in fields where “competitiveness” would be meaningful.

Ed - January 31, 2013

Really? I saw a piece in the Economist not long ago where they said, with typical candour, that Rajoy’s government wasn’t being given enough credit for the marvellous reduction in wage levels.

ejh - January 31, 2013

I’d be interested to know exactly what it said. It’s driven down public sector pay, all right. But that’s what I meant by fields in which competitiveness would be “meaningful”.

CL - January 31, 2013

“There is therefore no option: we have to try to simulate a devaluation, by cutting wages right across the economy.

The argument that this would lead to economy-wide deflation is specious,”

This was written almost 4 years ago by Kevin O’Rourke, one of Ireland’s 502 leading economists.
If reality contradicts the neoclassical model these chancers, who have what Veblen called a trained incapacity, conclude that there is something wrong with reality. And so reality has to be altered by austerity and mass unemployment.
O’Rourke, to be fair, has come to realize that the policy is not working,-a breakthrough of the obvious.

2. greengoddess2 - January 31, 2013

This is an excellent description of what is actually a permanent state of affairs. The effect of being around ‘ high status ‘ individuals who admire and sympathize with your attempts to control the proles who have an unfortunate habit of voting. Its one of the reasons they don’t like us. We can see thru it.
Chandalier socialism……

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