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Exiting the bailout and a wish list for the orthodoxy… December 17, 2013

Posted by WorldbyStorm in Economy, Irish Politics, The Left.
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Some may be under the illusion that all is well. ‘We’ have ‘exited’ the bailout, things are improving, growth is assured and so on.

And yet the demands of and from the private sector continue. Take this from Conall Mac Coille chief economist with Davy, in a piece in the Irish Times today which asserts that:

…progress on structural spending reform has been far more problematic.

And more:

The Department of Health is set to exceed its spending limits for a second year running. Efficiency savings envisaged have not been realised, necessitating an additional round of pay cuts under the Haddington Road agreement.

And check this out.

Finally, IMF proposals to target social spending at vulnerable groups have not materialised, with blunderbuss universal payments such as child benefit maintained.

It’s just internalised that universal payments are somehow inefficient, even wrong. It’s taken as read. Actually, it’s not just internalised, Mac Coille writes:

Ireland’s marginal income tax rates are exceptionally high, but are rarely portrayed as the inevitable consequence of a costly, inefficient public health service and bloated universal benefits.

Not a word on how universal benefits might be precisely the way to reach the largest spread of population, because their purpose is secondary in this analysis.

And look at what is sought:

But the absence of bond market vigilantes has limited the pressure to address structural spending problems.

And spending is a problem because…

…for now, substantive income tax cuts to help a broad swathe of Irish households join in the recovery still seem a distant prospect.

There you go. Substantive tax cuts are the way to a recovery. But… we can’t do that until we cut expenditure. And never mind about those who might need to access that ‘inefficient public health service’ and/or use those ‘bloated universal benefits’.

I hardly need mention how overtly political this is. Because none of these positions – which are founded on very specific political and ideological views of the economy and state and issue of state provision – are beyond question. None of them are self-evident truths. Once, before it went AWOL, social democracy would have countered them. Those counter-critiques still exist. But, now, in this state, it is an open question as to who will provide any sort of political resistance.

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Comments»

1. Jonathan - December 17, 2013

Back in 2006 Davy’s pessimistic scenario for 2010 was that there would be 60,000 house completions (actually around 15,000); that house prices would fall by 5% (actually around 40%); and that Irish GNP would grow by 1% per annum (it declined 10.1%) (if these figures are wrong, please let me know). I know it’s probably redundant to bring up stuff like this, but I think it’s worth resurrecting it just to show how wrong they were before, and why, in a less captured media society, they would not be treated with the respect they get. http://www.finfacts.ie/irelandbusinessnews/publish/article_10006629.shtml

2. CL - December 17, 2013

Its OK, a new plan,-a new strategy,-is in place.
‘The document, A Strategy for Growth, says unemployment will be 8.1% in the year 2020. Gotta love that .1,-a beautiful example of spurious precision.’
http://www.rte.ie/news/2013/1217/493307-economic-statement/

Anyone know who is responsible for this effort. Dept. of Finance? or was it outsourced?

RosencrantzisDead - December 18, 2013

I see the government’s economic plan involves tackling unemployment. By 2020, unemployment, if everything goes to plan, be only 8.1%!

It is hard to know what to say about this. You could say that the government is being conservative, but so much of the rest of their plan is pretty optimistic (2% growth for the next seven with no difficulties?).

WorldbyStorm - December 18, 2013

Even 8.1% is a high figure, isn’t it? I see the ESRI is out with yet more boosterism this morning.

sonofstan - December 18, 2013

UK rate already below that – 7.4% according to today’s figures (health warning obv. re people excluded or shunted onto disability benefit). Noticeable though that kids here have no real fear of unemployment – pretty confident they’ll get jobs and in the areas they want: whereas Irish govt. seem *reconciled* to high level of structural joblessness and emigration.

RosencrantzisDead - December 18, 2013

Even 8.1% is a high figure

Exactly, the target is woeful. 1 in 12 will still be unemployed by 2020. They must think we are really screwed.

Eamonncork - December 18, 2013

That 8.1% figure is bizarre. It’s twice what unemployment was before the recession. Given, as has been pointed out, the unwonted optimism about the other bits of the economy you’d wonder if this indicates an acceptance of high unemployment as a matter of policy. Especially given that, as Michael Taft, has pointed out, if it wasn’t for our atypically high rate of emigration unemployment would be at around 20% now.
So tackling unemployment means that it’ll take seven years before things are twice as bad as they were when the economy was in decent shape. In fact you’d have to go back to before the turn of the millennium to find a rate that high. Did they say anything about emigration? Apart from the fact that your descendants will be welcome home on holidays in a hundred years or so.
The conclusion to be drawn from this is that full employment like this ‘greed’ we hear so much about it seems to be one of these unsustainable things ‘we’ will never be able to afford again. In which case there’s not much point badgering people on the dole by reducing their money or indeed in making them work for free on Jobsbridge. Taft also pointed out that, before the crash, we had the highest proportion of young people in work of any country in Europe. Which suggests that there’s no point in providing a Bridge at all as there will not be enough jobs for those willing to work ever again.

CL - December 18, 2013

‘The Department of Social Protection will be charged with amending the tax and welfare systems “to ensure that work always pays and to address work disincentives for atypical workers”.
Workfare as employment policy

http://www.irishtimes.com/business/economy/ireland/mid-term-economic-strategy-report-section-by-section-1.1631641

CMK - December 18, 2013

Or to put it in other words: if you’re unemployed now there is a greater than 50/50 chance you’ll still be unemployed in 2020?

CL - December 18, 2013

Developing the ‘strategy’ was outsourced.

““We have to ask why the Government still thinks it’s necessary to pay two external consultant bodies over €70,000 to write this plan,” said Pearse Doherty

“Of even more concern is that the Government has shown itself willing to engage extensively only with certain sections of society in its economic strategising. Those sections include those in the finance sector and business. It has not engaged with the people who have borne the brunt of this crisis.”
http://www.irishtimes.com/news/politics/sinn-f%C3%A9in-criticises-spending-on-post-bailout-plan-1.1629031

3. fergal - December 17, 2013

“marginal tax rates” are exceptionally-really? Didn’t Roosevelt manage a 93 % one in the Great Depression?

4. Nessa Childers MEP (@NChildersMEP) - December 18, 2013

That is a scary question about political resistance. We are living in a sea of propaganda.

WorldbyStorm - December 18, 2013

It genuinely concerns me. Where is the force that is coherent enough and large enough to even start to push back immediately, or almost immediately? To my mind this crisis has been ‘won’ by those who implemented it or cleaved to the same mindset.

ejh - December 18, 2013

Though funny thing is, the more they get the more frustrated and angry they become.

Johnny Forty Coats - December 18, 2013

Yet in the 2011 elections – well after austerity had begun to bite – the Communist-Green alliance made only a minimal gain, going from 15 seats to 16. At the same time, the Left Bloc (a loose alliance of Trotskyists and former Maoists) saw its representation halved from 16 seats to 8.

The winners were the right, who also turfed the ruling Socialist Party out of government.

In short, a mass Marxist party is not necessarily indicative of either a high level of political consciousness or an ability to resist austerity – which has been even more painful in Portugal than here because social services were at a lower level to begin with.

Very often, and Portugal is a good example of this, the relative strength of the political parties in a country tells us more about its history than it does about its present. People join the PCP from family tradition there in much the same way as they (used to?) join Fianna Fáil here.

Johnny Forty Coats - December 18, 2013

The above was in reply to Liberius below.

Liberius - December 18, 2013

I never said that I expected a mass party to be capable of defeating the austerity just by its existence alone. My point specifically is that it becomes easier to mount resistance if you have a larger number of people to guarantee both a reasonable turnout at any protests you organise rather than a half dozen frenzied, placard wielding individuals, and more importantly the ability to organise large ‘off-grid’ social initiatives like soup kitchens for the homeless and the poor, and seizure of unoccupied property.

PCP-PEV’s vote in 2011 may not have increased but it did hold up which is in contrast to Bloco’s vote which was cut in half, something to remember there is that Bloco’s membership is only 6,800(2009). I can’t help but feel that that increased membership of the PCP and PEV gave it the ability to survive in a media environment which was anti-left considering the outgoing PS government; remember journalists are big into the ‘narrative’ these days.

Liberius - December 18, 2013

In Portugal the PCP has 60,500 members, the equivalent would be 26,500 for the ROI alone and 37,000 inclusive of the north. People can argue till the cows come home about the level of involvement an individual member makes in a large party but that isn’t going to change the fact that large party memberships are capable of mobilising large resistance when its needed.

If anyone has been watching the channel 4 series Fresh meat of late you’ll have seen some good examples of the kind of pretentious middle-class time wasters that seem to dominate the socialist left these days. Shame really as they’ll mostly go the way of Libertarianism what with their capricious natures.

5. Jim Monaghan - December 18, 2013

The losers.
The increased number who left
The increased number of unemployed.
Those who might have got jobs (part of above)
Those who suffered needlessly from Health cuts (increased waiting lists).
Those suffering from stress (and related stuff like spousal abuse) because of the mortgage crisis and allied financial concerns.
Those suffering from other cuts such as housing.

And I would add the “new” jobs will not be as well paid and will be even more insecure.

All in all our elites such as the professional classes, senior public servants and gombeen class have survived quite well.I am amused that in spite of the Troika the legal profession and legal processes have stayed quite unchanged.

6. 6to5against - December 18, 2013

I think the surprising upsurge in discussion of ‘unsustainable’ pensions is a good indicator of item number 1 on the wishlist for the next phase of ‘reform’.


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