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Inequality… June 25, 2015

Posted by WorldbyStorm in Economy, Irish Politics, The Left.
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Colin Murphy has a thoughtful piece on inequality in the SBP, even if the ideas therein aren’t necessarily to my taste. His basic thesis is that inequality shouldn’t simply be a concern of the left. Indeed he argues that:

Two world wars, the advent of the welfare state, the deepening of the concept of national identity and the advent of a sociological understanding of man as a product of his environment all served to promote the idea (and practice) of greater equality.

In the 1990s, though, with the “second globalisation”, this consensus collapsed. The result was both soaring inequality and a weakening of the social cohesion required to combat it.

I don’t think it’s any great stretch to point to the existence too of a counterweight in regard of the USSR as an implicit reason why western states tended towards welfarism during the post war period as states sought to entice populations away from communism. Now this isn’t as such an argument for supporting the existence of such states – one could rightly feel that it was at the very least problematic that oppressive states guaranteed implicitly European welfare states. And one could also wonder at the inability of social democracy to defend the gains of that period as well.

But be that as it may Murphy rightly notes that:

The danger here is that this becomes a vicious spiral. I saw how this works in microcosm when I lived in Johannesburg (where income inequality has increased since the end of apartheid). The rich perceive the poor as a threat, so they retreat into secure, private space.

Public spaces and services become the preserve of the poor, so the rich have less interest in subventing them. The public sphere thus deteriorates, and ever more people abandon it.

This is, as many will know, particularly evident in the US, and not just there. Underfunding of public services is now manifest across the ‘developed’ world in states where low taxation and decreasing expenditure is becoming the norm. That this has appallingly negative effects upon citizens and their lives is a form of almost deliberate collateral damage, and intrinsic to the dynamic.
Murphy suggests that French academic Pierre Rosanvallon has warned that the corrosive effects of the processes described above threaten the fundamental basis of our and others societies (given the level of inequality in this state). And he suggests that:

At the heart of this is the idea of reciprocity. If people don’t believe that the others around them are contributing their fair share, they won’t either. Reciprocity (which is similar to what Robert Putnam calls “social capital”) is vital to the success of democracy. And inequality is corrosive to reciprocity. He quotes Tocqueville: selfishness is “to societies what rust is to metal”.
The feeling that reciprocity has broken down is directed at “the two extremes of the social ladder” – the very rich and those dependent on welfare. For this, he has three remedial solutions, which could appeal across the political system: greater transparency of fiscal and social statistics, so people know exactly what is being paid by and to whom; “vigorous” measures to prevent tax and welfare cheating; and a return of universal welfare benefits.

I fundamentally agree with the latter, have question marks as regards the second and think the first is unquestionable. But I wonder if in some ways this prescription is simply too late. Because it’s not just a question of the status quo ante, but of a changing economic context where work itself, at least well paid, continuous medium to long career, style work is becoming – under the pressure of automation and other factors – scarcer.

In that new context the very nature of work itself and the relationship between state and citizens alters and it is telling and troubling to hear a rising chorus of voices – in the field of political economy calling for basic incomes, shorter working weeks and so on.

Yet, it is refreshing to hear again how inequality is in and of itself part of the problem rather than, as often seems to be the orthodox line, not merely an unavoidable byproduct, but rather a virtue of a system that is itself deeply problematic.

Finglas Campaign Against Household and Water Taxes (CAHWT) meeting from last night June 17, 2015

Posted by WorldbyStorm in Economy, Irish Politics, The Left.
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Press Statement 17th June 2015

The Finglas Campaign Against Household and Water Taxes (CAHWT) held a very successful meeting last night in the Bottom of the Hill pub with over 90 people in attendance

Over 90 people attended a ‘What Next for the Water Charges Movement?” meeting last night (Tuesday 16th June), which was hosted by the Finglas CAHWT. The mood was resolute in its ongoing opposition to the water tax.

Speakers on the night included Bernie Hughes (Community activist), Jimmy Dignam (Workers’ Party representative), Dave Gibney (MANDATE representative), Dessie Ellis TD and was chaired by Jessica Hughes of the Finglas CAHWT.

What is clearly apparent is that the water charges movement is as determined as ever to abolish this controversial tax. Whilst there may be differing views on tactics, it was agreed that above else unity is key in successfully winning this battle.

A lively discussion also took place on the direction that the movement should go in next. It was largely felt that progressive politics needs to come to the fore within in Irish politics. A presentation was also given on the recent Right2Water policy platform discussions, which have involved community activists, trade unions and politics parties who are involved within the water charges movement.

A strong focus was put on continuing to put pressure on the government and Irish Water over the coming months. It was agreed that the Finglas CAHWT would hold further protests and events in its struggle against austerity. The meeting ended with a message of solidarity being sent to the recently locked out Clerys Department Store workers.

For more information contact:

Jimmy Dignam (Workers’ Party) – 0851556914
Jessica Hughes (Finglas CAHWT) – 0851026921
Bernie Hughes (Community Activist) – 0872929214

(Picture attached: From Left to Right – Dave Gibney, Jessica Hughes, Jimmy Dignam)

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The arrival of Universal Health Insurance: Slow… slower… very very slow… June 17, 2015

Posted by WorldbyStorm in Economy, Irish Politics, The Left.
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From the IT today:

Minister for Health Leo Varadkar is looking at major alternatives to the plans for universal health insurance (UHI) put forward last year by his predecessor James Reilly.
Mr Varadkar has sought new research looking, for example, at confining UHI to covering only hospitals and excluding drugs or primary care services.

Ah, nothing like ‘new research’ to keep things moving ever more slowly along.

Those of us who have an ideological problem with the UHI scheme (from a leftwing perspective) from the off will probably feel this paragraph bundles some of its most pernicious aspects up in a nice concise conceptual package.

UHI – which would seek to eliminate the country’s existing two-tier health system by effectively making everyone a private patient – is officially the Government’s healthcare reform blueprint. Under a White Paper published last year by Dr Reilly, the system was to involve a multi-payer model of competing private health insurers and a State-owned VHI.

An ideology uncontained… June 16, 2015

Posted by WorldbyStorm in Austerity, British Politics, Economy, European Politics.
2 comments

This should be required reading for some, a piece on research that unsurprisingly suggests:

In a wide-ranging analysis of Britain’s performance in the decades before and after 1979, economists at the University of Cambridge say the liberal economic policies pioneered by Thatcher have been accompanied by higher unemployment and inequality.

But, more importantly:

At the same time, contrary to widespread belief, GDP and productivity have grown more slowly since 1979 compared with the previous three decades.

It’s always been remarkable how tenaciously the trope of productivity and growth increasing under Thatcherism has taken hold, and how uncritically it has been received both on right and parts of the left, and former left. I suppose that’s the thing with narratives, they provide massive simplifications that allow for reiteration of certain points, whether accurate or not.

There was one area that there was change… but… a double-edged sword this:

“Financial liberalisation was the sole aspect of the liberal market reforms introduced into the UK, initially in 1971-73 and more consistently from 1979, which materially increased the rate of economic growth,” the paper said.
“The freeing up of finance led to a huge, and eventually unsustainable, expansion of household borrowing. This temporarily accelerated the growth of consumer spending and hence GDP and of house prices, but in 2008 contributed to a banking crisis and the longest recession for over a century.”

Important, perhaps, to note that it was the ideological approach that led to the more recent events rather than ‘Thatcherism’ as such

But note again how the crisis of the last decade has not seriously undermined the broader narratives about economics and enterprise despite – by any rational reading – suggesting that those narratives are fundamentally incorrect.

A missive from the orthodoxy and some thoughts on Labour and Fine Gael… June 16, 2015

Posted by WorldbyStorm in Economy, Irish Politics.
10 comments

Fascinating to see Brendan Howlin pushing back against the strong version of the orthodoxy as represented by the Fiscal Advisory Council and the Central Bank, as against his own and that of the government, marginally weaker version of said orthodoxy. So he offers this novel argument in the IT yesterday:

One of the less discussed impacts of the recession may well be its long term effect on the economics profession. As John FitzGerald indicated when he retired from the ESRI, it remains a regret that the profession wasn’t sufficiently attuned to the dangers facing the Irish economy in the run-up to the crash.
I wonder whether this failing is now contributing to the profession’s view of the future.

Amazing too to read his rationale of Labour’s participation in the government. Well, actually his and Michael Noonan’s efforts on the economic front:

Michael Noonan and I share two core goals and we intend to make good on both.
We were elected to fix the economy and the public finances. We are well on the way to doing so.
But generously he doesn’t forget the rest of the crew…

Politically, I don’t believe that would have been possible without the two parties acting in concert. As a Government all decisions have been taken together, good and bad. Labour’s contribution has been significant.
Our recovery has been remarkable for the fact that industrial peace and social cohesion have been maintained. Industrial peace, in particular, in both private and public sectors has been a critical signal to investors that Ireland remained open for business and was serious about recovery.
Our second shared goal is to ensure that the Irish economy is not put at risk again. Having gone through the difficult task of getting things back on track, we have no intention of allowing the recovery to be derailed.

And it’s slaps on the back and cheers all around:

The scale of our progress is remarkable. In 2014 we returned the economy to primary surplus. In 2016 we will meet the “golden rule” – we will only be borrowing for capital purposes, because we will be able to meet day to day spending from the income we raise.
In the spring economic statement we commit to adherence to Europe’s fiscal rules.
The only question that has arisen here is the pace at which we move toward budget balance in structural terms, after allowing for the impact of the ups and downs of the business cycle. However, in the European Commission’s assessment of 2016, Ireland meets that target comfortably.

But you know, put aside the self-congratulatory rhetoric and it seems to me the rationale would double for something quite different. We’ve heard a lot of stuff in recent times about how Fine Gael and Fianna Fáil should bite the bullet and go into government together. That may indeed be the only option. And beyond that that Fine Gael and Fianna Fáil should merge. That is so unlikely short the economic apocalypse that I’d put good money on it not happening short to very medium term.

But really, reading Howlin’s contribution a different thought comes to mind, which is why all this bother with two political parties when one would do? Why don’t the LP and FG coalesce? What logical impediment is there if they work so well together, if all the decisions are taken together, if they act in concert? Why retain the distinctions between them?

And if the argument is that this is a crucial point, an emergency, well, what possible difference does that make? Is mild to no social democracy only for the good times? Is that what they believe?

Of course I don’t expect any such merger, though there are those in the LP ranks who have struck me over the years as being eminently suitable for joining FG. But really, as always the question becomes – what is the point?

Unemployed better off in work report: How many times does this have to be restated? June 16, 2015

Posted by WorldbyStorm in Economy.
7 comments

Is the thought that comes to mind when reading the following on RTÉ this morning:

The Economic and Social Research Institute study found that eight out of ten jobseekers would earn at least 40% more in work than from benefits, while six out of ten would see their incomes at least doubled.

This is news? There have been other similar reports over the years of crisis and all point to muchy the same conclusion. But, for there must be a but:

However, the report found that there are some families for whom the gap between in-work and out-of-work incomes is small.

Perhaps so – no great surprise there though a small gap is not no gap at all. Not a word either about how low incomes are.

It raises other questions, as to the embedded nature of the trope that some/a significant tranche/many are better of on welfare than working? Why is that believed, what odd comfort does it bring to some?

Greece… this time for real? June 15, 2015

Posted by WorldbyStorm in Economy, European Politics.
14 comments

It’s sure looking that way, isn’t it, as ‘negotiations’ break down.

From RTÉ:

Talks on ending a deadlock between Greece and its international creditors have ended in failure, with European leaders venting their frustration as Athens stumbles closer towards a debt default that threatens its future in the euro.

European Union officials blamed the collapse on Athens, saying it had failed to offer anything new to secure the funding it needs to repay €1.6bn to the International Monetary Fund by the end of this month.

The Guardian:

Last-ditch talks aimed at breaking the impasse between Athens and its international creditors have collapsed in acrimony with European Union officials dismissing Greece’s latest reform package as incomplete in a step that pushes the country closer to leaving the eurozone.

What had been billed as a last attempt to close the gap between Alexis Tsipras’s anti-austerity government and the bodies keeping debt-stricken Greece afloat was halted late on Sunday after less than an hour of negotiations in Brussels.

Perhaps something can be patched up over the next few days or so, but Grexit here we/they go?

Again, the Observer had it, even given a somewhat chiding tone, just about right last week.

Taxing times – redux June 11, 2015

Posted by WorldbyStorm in Economy, Irish Politics.
11 comments

Colin Murphy continues a run of good pieces in the SBP, this time focussing on tax, albeit one doesn’t have to agree with all his analysis. Still, he starts with an odd anecdote:

Lenihan introduced the USC (and the income levy that preceded it) for ideological as well as pragmatic reasons. He thought the poor should pay more income tax.
His views were shaped by his experience of the bin charge strikes in his constituency in the late 1990s. The protesters then “regarded the state as alien precisely because they had no sense of ownership”, he believed (as recalled by his former adviser, Cathy Herbert, in Brian Lenihan: In Calm and Crisis).

Really? Well then why did he think that offloading waste collection services to commercial parties would somehow increase that ‘sense of ownership’? Surely it would do anything but given, as those of us who have direct experience of this new disimproved private collection service know, there is no democratic oversight, let alone control of those entities.

Now, bad and all as waste collection charges are, surely retaining such services – paid through charges – in the public sector would have engendered a greater sense of ownership?

Anyhow:

The coalition has since sought to portray the USC as part of the penal legacy of the previous administration, and has removed more than 400,000 of the lowest-paid from it.
This is short-termist. The emphasis on reducing income tax is part of a system that is effectively a fraud on lower-income groups: in the long run, this tax burden will simply be replaced by indirect taxes (such as water charges), which weigh heavier on people with lower incomes.

I’d agree with that.

And – slightly tangentially – that dovetails neatly with the waste collection point above too. All those indirect taxes and charges break connections with people and providers – they actually increase the sense of ineffectuality and lack of control, again because these third parties that provide them are unnameable to democratic control.
He continues:

The idea that people on low incomes shouldn’t pay income tax is one of the shibboleths of the left. But a shibboleths of the right is the claim that the less well-off barely pay tax at all.

Is that entirely true? I’d have thought that for large tranches of the left there’s a recognition that all should pay tax but those on lower incomes should pay lower taxes. But he is right too about the point as regards perceptions on the right.

People with less money spend far more of their money on things that are subject to indirect tax – primarily Vat and excise. The result is that poor people contribute roughly the same proportion of their income in tax as rich people.
According to work from last year by economist Micheál Collins, based on the CSO’s household budget surveys, the poorest 10 per cent of households (with an average income of €10,000) pay just over 30 per cent of their gross income in total tax. The richest 10 per cent (with an average income of €155,000) pay just under 30 per cent in tax.

And Murphy is on a roll:

That latter figure exposes another shibboleth: the “52 per cent tax rate”. It is often said that this high marginal rate is inefficient and unfair.
It is inefficient – in theory. Taxes on labour reduce productivity; high marginal taxes are a disincentive to doing extra work.

But he debunks the idea fairly comprehensively:

…the impact of the marginal rate on the vast majority of people is minimal. According to work by the think tank TASC, just 15 per cent of income tax payers pay the marginal rate on more than a quarter of their income. Due to tax credits, reliefs and breaks, effective tax rates (ie tax actually paid) are far lower than the marginal rate. At an income of €67,500, a single person pays (on average) 34 per cent tax, according to TASC.
Discussion of tax often elides the difference between effective tax rates and marginal tax rates.
This suits the interests of the higher paid, because it fosters a perception that the marginal rate has a far greater impact on ordinary people than it actually does, and therefore that middle-income earners have a shared interest in reducing it

And then onwards to this:

Which is where the great shibboleth of our time comes in: the “squeezed middle”. Michael Noonan defined this as people earning €32,800 to €70,000. Though the phrase “squeezed middle” has apparently dropped out of favour, that income band has stuck as the anchor of debates on tax policy.
But Revenue statistics based on tax units suggest that the middle-income range is something like €25,000 to €40,000. By contrast, tax units earning €50,000 are in the top quarter of earners.
Tax measures targeted at those earning €32,800 to €70,000 have a far greater impact on those in the upper half of that range. Noonan’s “squeezed middle” is effectively the upper-middle, cloaked in common-man rhetoric.

All of which Murphy uses to sort of support the USC due to its transparency. I see the point he is making, albeit I’m not sure that’s the place I’d start if I was going about reconfiguring the tax system in the ROI. Still, and all, a refreshing analysis of an area where there are indeed far too many reactionary perceptions, and worse again policy approaches.

Austerity and the UK and elsewhere June 11, 2015

Posted by WorldbyStorm in Economy, European Politics.
4 comments

Heather Stewart in the Observer at the weekend had some good analysis in a piece entitled ‘Austerity isn’t ‘good housekeeping’: it’s dogmatic, risky and unjust’.

She notes that:

It’s a measure of the triumph of the pro-austerity argument in Britain that George Osborne presented his latest round of cuts in the Commons last week – a down payment on the £25bn he plans to make over the next three years – as a “culture of good housekeeping” in government. Austerity as common sense.

And this has effects, which she points to:

…there are already warning signs that parts of the public services are creaking. He cited a sharp increase in waiting times at hospital accident and emergency departments, and rising violent assaults in prisons as staff numbers are cut, as examples.

Moreover:

..the belt-tightening is likely to be profoundly unfair. Osborne has repeatedly said his cuts plan will involve a £12bn reduction in the welfare bill. Since pensioners are protected, and out-of-work benefits are a relatively small part of the £250bn social security budget, much of the burden is likely to fall on low-wage workers and their children – through reductions in tax credits or housing benefit, for example

And there’s the problem that it doesn’t work:

…more austerity is risky at a time when recovery appears to be fragile against a background of the bubbling eurozone crisis.
The argument that sucking demand out of the economy through public spending cuts could jeopardise growth may have been trounced in pre-election debates – but that doesn’t mean it isn’t right.

All this is true. It is causing problems – ones that are deep rooted and will persist across years and potentially decades. It is deeply unfair. It is in and of itself counterproductive and the Tory victory does nothing to alter that fact (and one can point to the fact that

And yet, and yet, part of me reads all this and goes… well of course it’s dogmatic! This is the Tories, after all. What did people expect? This isn’t a glitch as they see it, it’s a feature. Elsewhere in the Guardian there’s been some comment on the idea that the Tories aren’t the epitome of evil or are wrong all the time. Perhaps not. But it’s somewhat irrelevant and more to the point it betrays a misunderstanding as to the nature of their political project.

Often people, particularly liberal minded people, and some on the left, seem to think that all the political labels and categories are merely badges for what is essentially good intentions – that we’re all in this together, as it were, and everyone wants pretty much the same destination.

The reality is, of course, anything but that. One doesn’t have to see the Tories as the epitome of evil to see that the fundamental strands that infuse and inflect their philosophies as being wrong, reactionary and so forth. Just to be clear this doesn’t mean that on an individual basis all are like that, there are some counter-intuitive strands as well extant in that body of thought. But functionally it means that their approach to society is one which most progressives – one would hope – would realise as being entirely in opposition to our own project.

Perhaps David Cameron is a more liberal minded person than many/most in his party, perhaps the manifesto was a tilt to the right in order to consolidate party unity at a time when coalition with the LDs was still a feasible outcome, and in the knowledge that such a coalition would abrade some of the sharper edges. Perhaps so. And yet this is the party that in the actual coalition of the last five years implemented, by way of example, grievous measures in social welfare in relation to provision of benefit and so on, oversaw measures that explicitly supported those who were better off, I needn’t go on, surely?

An untrammelled Tory party is a genuinely disturbing entity. And it is untrammelled and governing on, as was made clear in a recent Guardian Politics podcast, the most right wing programme in two decades.

These things matter. These things are intrinsic to the Tory party.

Stewart is closer to the mark in the following:

So the cuts are larger than Osborne and his colleagues let on; they may threaten the quality of cherished public services, place an unfair burden on those who can least bear it, exacerbating inequality – and jeopardise the very economic growth which is ultimately the best way of tackling the deficit.
Labour’s proto-leaders are right to try to learn the lessons of the campaign and seize back the language of “aspiration”. But they must not abandon the central insight that austerity is not a necessity, but a political choice.

A pity the Labour Party was unable to make that case in the last five years. But as ever they cede ground to the right and then are amazed when the right captures yet more and runs with it.

The fruits of the Lansdowne Road Agreement for the government… June 10, 2015

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

Put aside all the stuff about salaries being ‘reinstated’ (whatever that may mean in a context where they’ve been pushed back for years – and given that the monies lost during that period aren’t coming back). Note this from an SBP analysis on the agreement, and not one that is massively sympathetic to the government:

But the biggest win for the government is the retention of 15 million extra working hours which were put in place under Haddington Road. They are worth around €300 million per year and were used by the government to pay for the recruitment of thousands of extra gardaí, teachers, nurses and doctors this year.
Despite much grumbling before the talks by unions, the increase in the standard working week for most public servants by 2.25 hours remains in place.
So too do the reduced overtime rates, the revised sick pay scheme and the career average pension scheme for new public servants.

I know this may not be the most popular opinion on the left, but as a trade unionist myself and one active in disputes over the years my own belief is that the focus on wages, while absolutely correct in regard to PS workers on lower wages, has functioned as a diversion from reversing those defeats on terms and conditions. And worse again while wage increases are somewhat easier to reinstate (albeit in the partial manner noted above), the loss of better conditions is one that will continue for the foreseeable future. Add to this the tiered nature wages introduced for many PS workers across the last six or so years and that defeat becomes almost appallingly comprehensive.

Nor is this the end:

There are other reforms which have yet to be delivered, such as the cutting of some civil service grades. It is in the new agreement again. There was also a promise of “significantly improved performance management” in the public service.

A strategic error is compounded.

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