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A necessary (partial) counter-narrative to the austerity orthodoxy January 19, 2017

Posted by WorldbyStorm in Uncategorized.
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This looks interesting… a book that examines the record of austerity in the Irish context:

Austerity was necessary to correct Ireland’s public finances, but it was not responsible for the rapid recovery of the country’s economy subsequently, according to a major new analysis of the economic crash and recovery.

And:

Instead of crediting austerity with the recovery, the book credits Ireland’s strong export industries and buoyancy in the country’s top export markets, along with European Central Bank quantitative easing and historically low interest rates.
Together these factors helped to stabilise the banking system and supported the recovery, according to the book’s contributors who include economists, social scientists, political scientists and other “internationally acknowledged scholars”.

The response to this will be educative, assuming there is one.

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1. Ed - January 19, 2017

Just looking at the table of contents on the publisher’s page; I see there’s a chapter on ‘International Actors and Agencies’ by the indefatigable Brigid Laffan. I’m sure we’ll see a very incisive account of the Troika’s destructive role in the Eurocrisis from Laffan.

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Ed - January 19, 2017

This is Leahy’s summary of the book on that point; I’m going to go out on a limb and say this was Laffan:

“Austerity was not a Troika-imposition but was already well under way long before the IMF and the ECB arrived in Dublin. Describing the policy as one of “auto-austerity”, the book argues that banking policy, Nama, the promissory note device and the decision to convert that note into long-dated government debt were also “home-made”. Ultimately, the troika offered a useful scapegoat for politicians, but it may not have mattered all that much except as a lender.”

This also sounds like waffle on a grand scale:

“The book notes that less than a third of the increase in Ireland’s national debt is down to the banking crisis, and that the rest of the debt has been incurred to maintain the sort of society that could not be afforded even for a few years.”

What ‘sort of society’ would that be now?

Any take on the ‘recovery’ that doesn’t have right up front and centre the fact that Irish GDP, GNP and any other P statistics are completely unreliable is not serious, especially not after last year’s ludicrous growth figures (the book may cover this ground—Sean O’Riain is a serious writer, at least—Leahy may just not have chosen to highlight it).

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WorldbyStorm - January 19, 2017

Yes, just to be clear I don’t agree with the austerity necessary line – and I think this book undermines its own case in that respect which is no harm

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Ed - January 19, 2017

Oh yeah, didn’t think you did at all of course – I suspect that the apparent contradictions here may come from it being an edited collection with different viewpoints. I’d like to see O’Riain’s chapter, his book on the demise of the Celtic Tiger was the best thing I’ve read on that subject; I think you can get one of the chapters online at the ESRI’s journal, it was titled ‘The Crisis of Financialization in Ireland’—well worth looking at. Steven Kinsella also did a good journal article a few years ago rejecting the idea that Ireland in the late 80s/early 90s was a poster-child for ‘expansionary fiscal contraction’ so he might be putting across the same line here.

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Ed - January 19, 2017

Here’s the O’Riain one, seems to be free to access:

http://www.esr.ie/article/view/35

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6to5against - January 19, 2017

Absolutely. But the point I’m making below is that whatever the book, or articles within it, actually say, the coverage is going to be broadly along the lines of ‘austerity necessary, say experts…’

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dublinstreams - January 20, 2017

did the ECB have to arrive in Dublin before acting in ways that would in the end lead to austerity?

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2. 6to5against - January 19, 2017

does it really matter what’s in the book? Few will read it, and RTE already told me this morning that it showed us how austerity was necessary.

We’re going to see a lot of this in the Trump era, I think. All evidence will be proclaimed as pointing to how right he was, even if it in fact points to the opposite.

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3. 6to5against - January 19, 2017

On another point, though, how can they say that austerity was needed to fix the deficit, but that the economy recovered by itself?

If the economy has recovered – and regardless of social justice, the economy is now as big as it was pre-crisis – then why can’t it again support the levels of public spending seen pre-crisis?

And if the economy was going to recover anyway, wasn’t the deficit a temporary problem that could – to some extent – have been absorbed by the state?

I saw coverage in the IT (link below) that the banking debt is ‘only’ 1/3 of the total new debt taken on in the crisis years. As if that was such a small percentage as to be irrelevant. So on the same logic, another 40bn or so of public debt could easily have been absorbed to maintain some sort of decent social structure.

(though the article also notes how our social welfare system was protected.)

https://www.irishtimes.com/news/politics/austerity-is-not-responsible-for-the-recovery-experts-claim-1.2942139

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