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july29

Eurostat Has Done Us a Favour

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We should not under-estimate the impact of the Eurostat ruling. It completely removes the rationale for Irish Water and the water charges.  After Eurostat, there is no policy, no direction, no strategy.  Ministers will downplay the ruling with a ‘move-on-nothing-to-see-here’ rhetoric, punctuated by a ‘there-is-no-alternative’ but all this does is expose the inability to grasp how fundamentally the landscape has changed.

Eurostat was never going to rule in any other way than it did.  The Government admitted this last April in the Spring Statement when it put all water expenditure back on the books in its projections up to 2020.  The fundamental issue is not whether enough people paid the charges.  It was the ‘market corporation’ rule:  did Irish Water look like and act like a commercial company in a market economy?  Eurostat said no – and this is all down to the Government’s headless-chicken response after the mass Right2Water protests last October and November.

The Government capped charges, froze them until 2018, and introduced an indirect subsidy through social transfers (the water conservation grant).  The lack of ‘economically significant prices’ (i.e. charges that reflect the cost of producing water) and government control led Eurostat to rightly label the whole exercise as a mere reorganisation of non-market activities.  Given all this, what company in the world could be considered a market entity?

The main rationale for the Government’s water policy was not charges; this could have been introduced as a stand-alone revenue-raising measure.  Nor was it the creation of a single water authority; that could have been done as a public agency rather than a corporation. The over-riding issue was to take the estimated €5.5 billion of desperately needed investment over the next seven years ‘off-the-books’.  Everything flows from this:  to take investment off the books you need to create a corporation, you need to charge a ‘market-like’ rate for the service.

Remember those lectures from Government Ministers and commentators with that ‘common-people-just-don’t-understand’ attitude?  Without the investment there would be water shortages while we would all be walking through sewage.  And the only way to get this investment was through Irish Water and charges.

Eurostat has killed that narrative.  Investment will be on –the-books.  With that foundation removed, the edifice – and the rationale for that edifice (the corporation, the charges) – crumbles.

What now?  Whatever they say in public Ministers must know its game over.  The only way to pass the Eurostat test is introduce ‘economically significant prices’.  This would mean reverting to prices based on usage with no cap determined by an independent regulator.  Is that likely?  No, not with the potential to bring another 100,000 to 200,000 on the streets.  The people didn’t win many victories during the austerity days; they won the battle over uncertain charges, PPs numbers and cut-offs.  No political party is going to challenge that.

How do progressives react to this?  The safe ground would be to call for the scrapping of the charges and the reform of Irish Water.  Fianna Fail is already calling for that.  Progressives can and must go further.  We can’t effectively challenge the current ‘steady-as-it-goes’ Government approach with a ‘steady-as-it-went’ that dominated past policy.  We need creative and innovative thinking that can not only address the issues but present an exciting, inclusive alternative to water supply and all public provision.

Investment

We need to increase investment to €600 million annually to modernise our infrastructure.

Water investment has been a bit of a roller-coaster ride.  We are now slightly ahead of 1995 levels after peaking in 2008.  We need to do better.

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On the “Unelectable” Jeremy Corbyn

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Anyone who has glanced at a copy of the Guardian this past week, or the latest issue of the New Statesman, will have found themselves inundated with a wave of opinion pieces arguing against the possible victory of Jeremy Corbyn in the upcoming Labour party leadership election. The spectre of Corbyn has forced the hands of the commentariat, who must now state plainly that anyone who votes for such a leftist candidate is naive, deluded or simply mad. They will have, as Polly Toynbee put it, taken leave of their senses. What was a shadow of discontent during Ed Miliband’s timid efforts at turning left has now become an open and unabashed damnation of socialism and its advocates. There is no left but the hard left, and the only way is forward is to be as “pragmatic” as the Tories.

The have been a couple of constants in the media’s portrayal of Corbyn. First, the assertion that his rhetoric appeals primarily to naive youngsters, the disengaged youth who had given up on politics until Occupy, Syriza or Podemos came along to inspire them back towards the fold. While there is little doubt that Corbyn is the overwhelming favourite of young Labour party members, many of who have joined in the aftermath of this year’s election, his appeal is certainly not limited to those born post-Thatcher. Corbyn’s primary issues – renationalising the railways and the utility companies, taxes on wealth to pay for free third-level education, maintaining the NHS, ending Britain’s nuclear program – are all popular across the board. Even Tories are split on the railways, and the SNP have shown how much support there is for not wasting billions of pounds on nuclear weapons that will never be used. Meanwhile, Ed Milliband’s indecision on the same topic was deadly.

The media’s off-hand dismissal of Corbyn’s support base as passionate but misguided youth also contradicts their claim that Corbyn’s ideas are “out-dated”. One Guardian editorial says that his solutions to social crisis “long pre-date the challenges of the 21st century”, but does little to elucidate any actual issues with those apparently ancient policy positions. This is perhaps the first time that the much sought-after youth vote has been derided as backward, nostalgic and out of touch. 

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Reality and Myth of the US ‘Internet Revolution’ – And its lessons for China

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China is speeding up still further its ‘internet revolution.’ From the viewpoint of China’s overall economic strategy premier Li Keqiang has launched the concept of ‘Internet Plus’ – emphasising integrating the mobile Internet, cloud computing, big data and the Internet of Things with manufacturing and e-commerce. To further boost Internet use the premier recently urged China’s telecommunications operators to enhance Internet speeds and cut prices.

China’s still greater emphasis on the internet is even more impressive as it is in a context that China already has by far the world’s greatest number of internet users – 642 million in 2014, compared to the US’s 280 million and India’s 243 million. From a global perspective 21% of the world’s internet users are in China compared to 9% in the US.

Equally striking is the build-up of China’s investment in Information and Communications Technology ( ICT) of which the Internet is at the core. Over the last two decades China’s investment in ICT was already generating 1.0% a year total GDP growth – out of an average 8.8% annual expansion. As the Table shows over the last 20 years China’s annual GDP growth created by ICT investment was already significantly higher than any other major industrial or BRIC economy – for example two thirds higher than the US, over twice that of Germany and three times that of Japan.

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 But even given this high level of achievement China’s further push into the internet is vital for economic strategy. In a modern economy the internet has expanded far beyond its original use with computers to become the most rapidly growing sector of telecommunications, retailing, and application to advanced manufacturing – hence the key idea of ‘Internet Plus’.

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Ghosts of Alternatives Past

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This is a transcript of a talk given by Helena Sheehan at the “Democracy Rising” international conference, Athens 16 July 2015

What echoes and shadows of left experiments of the past haunt us as we embark on a new era opened by the formation of a radical left government in Greece? What is the plot of the longer story in which this new episode is embedded? How has the weight of the wider world, the power of the global system, borne down upon attempts to move from capitalism to socialism, whether in rupturalist projects, stemming from the October Revolution, or more protracted programmes of transformation, such as those set out by the ANC in South Africa in 1994 and by Syriza in Greece in 2015? What are the dynamics of attempting to forge an alternative in the face of the hegemony of there-is-no-alternative? How to make history in conditions not of our making? How, with so much going for it, nationally and internationally, has the ANC failed to achieve, or even approximate, the society that those who fought and died for it set out to achieve? How could Syriza, in the face of far more formidable obstacles, advance both its immediate programme and a new path toward socialism?

There is now a long history of left alternatives, even of left governments. From the Paris in 1871 to Athens 2015, we have seen hopes rise and the prospect of a new order come into view.

Some left governments have come and gone with little attention from outside their borders, such as that of Akel in Cyprus so recently, whereas others have captured the imagination of the world, even to the point crossing borders to be a part in it, eg, to Spain in 1936, to Greece in 2015.

The storyline looming largest in our story is the October revolution of 1917. It went farthest and lasted longest. It is a foundational myth of our movement. We have varying versions of it, not only about what happened, but about what might have happened.  I have imagined and written my way through its early decades and witnessed its later decades.

If you looked at a map of the world in 1989, countries defined as socialist covered vast territories of this planet. It is not so now.

Why? Volumes have been written by now answering this question. Through 1989 and 1990 I was often in Eastern Europe, exploring the meaning of this vast overturning in its world historical implications. I never accepted the postmodernist ban on grand narratives. There was a dominant grand narrative in play and I believed it needed to be met with a counter-narrative on the same scale. Their story was one of capitalist triumphalism, captured in the mocking joke that socialism was the longest, most painful, most inefficient path between capitalism and capitalism.

Much of the left retreated in dismay and disarray, unable to overcome confusion and to conceive of an alternative narrative or even to believe in the possibility of an alternative narrative. Others carried on, even though our philosophy of history had been dealt a massive blow. We had believed that history, in however complicated a way, was moving from capitalism to socialism, and then we beheld the opposite happening before our eyes. I saw lives turned upside down and nations disappearing from the map of the world.

So why our defeat? Many reasons have been given. There were monumental mistakes within our own movement. There was murder, treachery, suppression, fear. There were honest voices silenced. There were alternative paths not taken. There was an unfavourable balance of forces. There were conditions of underdevelopment. Socialism was meant to be built on other side of advanced capitalism. Not only its economic productivity, but its parliamentary democracy, mass media and complex civil society. It was meant to be a further development, not a suppression, of these advances in history.

Nevertheless, there had been expropriation of the expropriators, social ownership of the means of production, distribution and exchange, relative equality of opportunity and a radical shift in the balance of power in the world.

The existence of a socialist bloc made the hegemony of capitalism incomplete, but the intensifying hegemony of capitalism made the existence of a socialist bloc increasingly precarious. An advancing globalisation shaped by capitalism was all the time tightening its grip and extending its hegemony into territories and into psyches previously outside its dominion.

Socialism was all the time in a world dominated by capitalism. It was not only the internal failures of these regimes, which made their populations turn against them, but the lure of an imagined other of freedom and plenty that eluded them in reality when they moved towards it. Most fundamentally, It was the external pressure of an increasingly integrated global capitalism exerted upon an inadequately achieved socialism that brought its downfall.

So what then? We had to re-think and re-coup, to analyse our defeat and to seek a new path. Our glorious and tragic past had to yield to a new paradigm. One thing we had to face was that socialism could only be built on consent and in ever more complex conditions. The left would have to stop dreaming of storming winter palaces, of imagining ruling through decrees, purges, guns and gulags.

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No Country for Young People

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So you’re young, ready to take up work, make a bit of money and, most of all, make the social contribution that is expected of all members of the homo economicus species.  There’s only one problem.  You live in Ireland.

Following on from my previous blog on the weakness of our market economy to produce jobs – except in the construction sector – let’s look at employment growth by age.  Overall employment is rising, even if it is patchy.  But not for young people.   For young people, the jobs recession continues apace.

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Employment grew by 2.2 percent overall.  But for young people – between 20 and 34 years – it fell by 1.5 percent.  Among older groups – over 50s – employment grew by 5 percent.

When we drill down further, we find that those aged between 30 and 34 years saw employment fell by 3.1 percent.

This is part of a longer trend.employment_growth2jpg

Since the crisis began, employment has fallen by 10 percent.  However, for those aged 20-34, employment fell by a third.  For other age groups, employment has recovered and increased – with employment among 50s and over increasing by 14 percent.

There has been some discussion about bringing Irish people back from abroad.  It has been suggested that a main obstacle is our ‘high’ tax regime (sigh).  As we see above, the problem remains what it has been some time ago – lack of jobs (though there will be some sectors that are undergoing growth).

Young people face more problems than just falling employment.  Since 2008, nearly 475,000 people have emigrated.  Unsurprisingly, the majority who left were young people.  Over 300,000 men and women aged between 20 and 34 years have left the country – or 65 percent of all those emigrating.

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For those who stayed behind it’s still tough out there in the labour market.  The unemployment rate for those aged between 20 and 24 years the unemployment rate is 19.6 percent – twice the national average.  No wonder Eurostat estimates that 40 percent of young people are at risk of poverty or social exclusion (for the age group 18 – 24 years).

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Strengthen Ties with the People and Maneuver Cleverly: The Tasks of the Greek Radical Left

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The last few weeks have seen a number of crushing developments in Greece. Especially the Greek referendum and the signing of a new memorandum by the SYRIZA government are historical events which will strongly influence not only the future of the Greek but of the European Left as well. They will also influence the further course of the EU and the Eurozone, which came on the verge of dissolution and showed by the way it dealt with the crisis its true class nature.

SYRIZA’s signing of a new memorandum cannot be called otherwise but a heavy, unacceptable compromise and a capitulation. This is all the more true, since the Greek people, with its decisive “No” had expressed a massive support for a break with the memorandum policies in the Greek referendum just a week ago. The SYRIZA leadership, however, and Alexis Tsipras personally, chose to come in line with the spokesmen of “Yes”, the bankrupt bourgeois Greek political forces that supported the previous memoranda and the corrupt Greek and European elites.

This choice of the SYRIZA leadership does not in the least diminish the importance of the daring “No” raised by the Greek people in the referendum. This was a “No” not only to the EU agreement proposals, but the memorandum and austerity policies as a whole. The Greek people stood up against unbearable pressures by the Greek mass media, the parties of the ruling class and the EU leaders and showed, by their stance and vote, that they are ready and willing to support another road and overthrow the austerity policies. This result, unexpected even to the most optimistic commentators of the Left, is a proof of the possibility and a call for resistance of the European peoples, as the only force capable of producing radical change.

The decision of the SYRIZA leadership to compromise at all cost with the lenders must be criticized by all Left activists and Marxists in particular. However, it is essential to provide a serious criticism, which points exactly and explains its mistakes.

A number of ultra-Left forces here in Greece, and perhaps elsewhere too, respond to SYRIZA’s compromise by shouting “betrayal”, arguing it proves the bankruptcy of reformist tactics and the fact that the revolutionary overthrow of capitalism is the only road. However, this kind of criticism misses the fact that the situation in January, when the SYRIZA-ANEL government was formed, was not revolutionary, and it is neither so now. In such a situation it is necessary to maneuver and arguing that focusing on maneuvers and reforms leads to a deadlock, is the wrong way to argue. While this is true on the long run, it does not rule out the necessity to deal seriously with the phases of the struggle when maneuvering predominates and this cannot be done by calling for the immediate application of revolutionary tactics.

In fact, the SYRIZA leadership must be criticized not for maneuvering in general, but for maneuvering badly. It must be criticized for the vacillations and lack of planning it showed during this phase of maneuvers, leading it to a position where it was forced to accept an intolerable compromise. In particular the following points should be noted:

  • SYRIZA lost too much time in meaningless negotiations for months. The dragging on of these negotiations was just a means for the ruling circles of the EU to drive the Greek economy to the present financial suffocation, after exhausting its reserves. The supposed progresses during these negotiations, like the Greek 47 pages proposal, were all sham, a plot intended by the German ruling circles to bring about the present situation.
  • The election of Prokopis Pavlopoulos as President of the Greek Democracy was also an unnecessary concession. It indicated SYRIZA’s leadership readiness for further moves to the Right, when the situation called for cautious moves to the Left.
  • The payment of roughly €8 billion in February-June from the Greek reserves to the EMF was also a step leading to direct capitulation. If the SYRIZA government wanted to base itself on the people, it should have led things to a referendum in February or March, when it had still the means to resist for some time the economic sabotage from the EU. Obviously, if the Greek government had some billions € in reserves this might not suffice to support a break with the EU, but it could help endure for some months a situation with closed banks, etc, and this would put the EU ruling elites under pressure, as the consequences of the protracted instability would begin to be strongly felt by their economies too.
  • Apart from these Right mistakes, the SYRIZA leadership made, in our opinion, a “Left” mistake when it rejected the conciliatory proposal made by Merkel just before the decision for the referendum. This proposal for an extension of the present memorandum for 5 months would have provided the Greek state €15.5 billion for this five month period. It would have been a harsh compromise, including an “evaluation” by the “institutions”. However it would last for only 5 months leaving further options open, while not including the devastating, enslaving conditions of the new memorandum, like the sell-off of public property. During that time the Greek government would build up some monetary reserves from various sources (EU inputs, tourism, taxation etc). Moreover, the end of this five month period would coincide with the parliamentary elections in Spain. A Greek referendum at that time, together with a possible victory of the Left forces in Spain (especially if they are able to unite), would have given a strong thrust to popular movements across Europe.

All this comes to show that, despite all negative aspects, this would have been an acceptable compromise. The reason the SYRIZA leadership failed to take advantage of that opportunity is its fear of the people, together with its illusions about the real intentions of the EU leading circles. As a result it never considered seriously the prospect of a rupture at a suitable moment and of preparing the people for it, but chose to reach a “final” agreement at all costs, falsely hoping it would not be so harsh.

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The defeat of Syriza and Its Implications for the Irish Left

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The EU has enforced a humiliating surrender on Greece.  The Syriza government that was elected to end austerity has been forced to implement it.  The meaning of Wolfgang Schauble, the German Finance Minister’s infamous phrase ‘we can’t possibly allow an election to change anything’ is now clear.

The scale of the brutality is astounding.  To take just one example:  there will be a ‘significantly scaled up privatisation programme’ to generate a fund of €50 billion. This fund will then be effectively controlled by the EU to ensure that bank debt and bondholders are paid off.  Up to now €7 billion worth of privatisation has been pushed through by other governments in Greece.

The Irish government helped humiliate the Greeks. The former Greek Finance Minister, Yanis Varoufakis, has stated that Ireland – along with Spain and Portugal – were among his ‘energetic enemies’. He explained why,

the “greatest nightmare” of those with large debts – the governments of countries like Portugal, Spain, Italy and Ireland – “was our success”. Were we to succeed in negotiating a better deal, that would obliterate them politically: they would have to answer to their own people why they didn’t negotiate like we were doing.

This attitude became public when the Labour Minister, Alex White, welcomed the ‘fair’ deal. The Taoiseach, Enda Kenny, went further and claimed that, under the deal Greece, would ‘thrive and prosper’

The Irish government tried to invoke an undertone of nationalist rhetoric to bolster its position. ‘The Greeks are looking for more money from us – they should take their medicine like we did’ was the message. But the issue cannot be framed in such terms because the original €7.5 billion that the Greek government requested as a loan was never going to be used to fund public services. It was earmarked to repay previous loans because Greece had been put on a treadmill of austerity from which it could escape.

In 2012 the Troika intervened in Greece to safeguard wealthy private creditors. In return for a haircut on their loans, these investors got EU institutions and the IMF to fund a Greek loan that guaranteed them re-payments. These ‘loans’ triggered further austerity and created the latest crisis.

So the issue was never about Greek people begging from others in Europe. It was about a devious mechanism to make the Greek people pay for debts to wealthy bondholders. Which is precisely what happened the people of Ireland.

The Irish government’s strategy of using ‘quiet diplomacy’ to get  the Irish debt reduced has proved an abject failure. But by backing Germany’s brutal approach, it has copper-fastened debt re-payment from Ireland until 2053.

WHY DID THE  EU TORTURE GREECE?

Stathis Kouvalakis, a member of Syriza, has described the outcome as ‘the most resounding defeat of any leftwing government in Europe after the war’. It certainly represents a turning point in leftwing politics.

Ever since the crash of 2008, there has been an increasing call among activists to forget ‘old’ debates about reform or revolution. Yet the betrayal of Syriza re-opens this very question. To understand the implications for future socialist strategy, it is necessary to analyize the motivations of both the EU elite and the political strategy of Syriza.

For Paul Krugman, the actions of the EU in humiliating Greece are an act of ‘madness’. The assumption that the EU acted irrationally also finds an echo in Varoufakis’ efforts ‘to save capitalism from itself’. He had aimed  to put ‘forward an analysis of the current state of play that non-Marxist, well meaning Europeans who have been lured by the sirens of neoliberalism, find insightful’. In other words, to present a rational case for why austerity policies would harm capitalism. More generally, Syriza’s strategy was premised on the fact that it could persuade its European ‘partners’ to move away from austerity.

Once they came into government, Syriza found that their words literally fell on deaf ears. Here is Varoufakis’s description of what occurred when he spoke to eurozone finance ministers

‘there was point blank refusal to engage in economic arguments. Point blank. You put forward an argument that you’ve really worked on, to make sure it’s logically coherent, and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply.”

There were a number of reasons why it was not possible to even get them to listen.

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Growing the Economy the Robin Hood Way

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Who said the following?

‘ . . . if the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth.’

Or

‘The poor and the middle class (middle income) matter the most for growth.’

Or

‘ . . enhanced power by the elite could result in a more limited provision of public goods that boost productivity and growth, and which disproportionately benefit the poor.

The Socialist Party of the World?  The European Zapatista League?  The People’s Front of Judea (or the Judean People’s Front or the Judean Popular People’s Front)? 

No, it was the International Monetary Fund, that crazy gang that gave us poverty, deprivation and economic deterioration to just about wherever they went (now playing in Greece).

The IMF has recently published Causes and Consequences of Income Inequality: A Global Perspective – a strongly argued study that concludes that increasing equality is one of the best things a country can do to promote sustainable growth (that, and investment).  They propose a number of channels – fiscal redistributive policies, investment in education and health, and financial inclusion policies (e.g. basic bank accounts, etc.).

A particularly noteworthy finding is an estimate of the impact of redistribution on growth. 

impact1

If the income share of the poorest 20 percent increases by one percentage point, GDP grows by 0.4 percentage points.  However, if the income share of the highest income group, the top 20 percent, increases, GDP growth actually falls.

In other words, redistribution that leads to greater equality is good for the economy; redistribution that favours the highest income groups is bad (Britain after the Tory budget, take note).  You want to grow the economy?  Do a Robin Hood on it – take from the rich and give to the poor.

So what can we make of the Minister for Finance’s latest comments

noonan1‘I use the Budget for economic management purposes and I’m going to cut personal taxes in this Budget . . . I’m going to cut the Universal Social Charge (USC) by at least 1 per cent and maybe a bit more.’

The ESRI estimated the impact of cutting the USC’s standard rate of 7 percent on income groups.  This is what they found.

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A cut equivalent to €500 million (cutting the USC standard rate from 7 to 5.35 percent) has almost no impact on the poorest 20 percent.  There’s not much of an increase in the second quintile group (the 3rd and 4th deciles).  However, the greatest gains go to the highest income groups – the 9th and 10th deciles.

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Statement from the Communist Party of Ireland on the attempts to crush the Greek working class

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The European Union has exposed its essential class nature in its attitude to the Greek people. After months of arm-twisting, bullying and blackmail it has imposed even more draconian austerity on the working people of Greece.

The stance taken by the Irish government was only to be expected, as it long ago surrendered all pretence of defending Irish national and political sovereignty and the interests of our people. They have accepted their role as gatekeepers and willing collaborators in defending the interests of the EU above those of the people. They never fought for the interests of the Irish people, so why would one expect them to champion the interests of the Greek people regarding debt and austerity?

Developments within the European Union confirm the stand taken by the Communist Party of Ireland over many decades regarding the various treaties, the EU’s essential class nature and whose interests it serves.

The humiliation of the Greek people is designed to send a very clear message to workers throughout Europe: that criticism or alternative economic and social policies will be defeated. This is for the purpose of reinforcing the mantra of “TINA”: that there is no alternative to the dominant interests of the monopolies and big business. It is clear that no matter who working people vote for, or how many referendums they have, there is only one economic, political and social policy allowed within the European Union.

The CPI has consistently challenged the illusions deliberately nurtured and fostered by both the EU and its supporters among the Irish economic and political establishment, also including elements within the trade union leadership, all the main political parties, and, unfortunately, sections of the political left.

The reformist illusions of SYRIZA have come unstuck on the nature of the European Union and the real, existing class interests at the heart of the EU. Equally—as we have consistently pointed out—debt was and is being used as the main weapon against the people, creating the pretext for a massive assault on workers’ rights and conditions, not only here in Ireland but throughout Europe, to justify a massive transfer of public wealth to both domestic and global monopolies, resulting from the privatisation of public companies and assets.

The dominant elements within SYRIZA have accepted plans for a high level of domestic economic supervision by the bail-out monitors of the Troika, including the IMF, as well as an “overhaul” of public administration supervised by the EU Commission.

It is clear even at this early stage that the SYRIZA government has surrendered many of its “red-line” demands and agreed to accept draconian measures in a renewed assault on workers, including attacks on pensions and an increase in VAT by Wednesday 15 July, as a precondition for starting negotiations over a third bail-out package—yet to be defined or agreed—that may total between €82 and €86 billion over three years. And another “red line” has been crossed: contrary to Greek demands, the IMF will be involved in the third bail-out.

In addition, Greece will have to transfer more than €50 billion in public assets to a “trust fund” before they are privatised, including the national electricity service, ports and harbours, and many other vital public assets.

SYRIZA has also agreed to even more ambitious market “reforms,” abandoning its pledge to reverse previous attacks on workers’ rights or what the establishment calls “labour market reforms,” notably on collective bargaining. This is the culmination of the disarming of the working class.

Half the proceeds of the sale of public companies (€25 billion) will be used for recapitalising banks, and a quarter each (€12½ billion) will go to debt repayments and investment; in other words, the people’s wealth is to be squandered in the interests of the rich and powerful.

Reformist parties such as SYRIZA, the SPD in Germany, the British Labour Party, the French, Spanish and Portuguese “Socialist Parties,” the Irish Labour Party and other such political formations throughout Europe have facilitated this continuing assault on workers, siding with their own ruling class, in alliance with the EU, against workers. These reformist parties are the conduit for securing the interests of those same dominant economic and political forces within the workers’ movement. These political groupings have increasingly become essential mechanisms of control over workers and their organisations.

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The Euro is a mismatch between 19th century money and a 20th century economy

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This quote from Wolfgang Münchau’s column in the Financial Times today has received a fair bit of traction on social media:

“A few things that many of us took for granted, and that some of us believed in, ended in a single weekend. By forcing Alexis Tsipras into a humiliating defeat, Greece’s creditors have done a lot more than bring about regime change in Greece or endanger its relations with the eurozone. They have destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union.

In doing so they reverted to the nationalist European power struggles of the 19th and early 20th century. They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change.

But it was not just the brutality that stood out, nor even the total capitulation of Greece. The material shift is that Germany has formally proposed an exit mechanism. On Saturday, Wolfgang Schäuble, finance minister, insisted on a time-limited exit — a “timeout” as he called it. I have heard quite a few crazy proposals in my time, and this one is right up there. A member state pushed for the expulsion of another. This was the real coup over the weekend: regime change in the eurozone.

But what Münchau points out as a recent development within the EU, coming out of the so called ‘deal’ this weekend with the humiliated Greek government, is actually fundamental to the structure of the Eurozone and the single currency.

As John Ross pointed out in 1997 in his analysis of the proposed single currency and the strictures of the Maastricht Treaty, the current political power struggle is reflective of the fact that with the Euro a 19th century economic model was imposed on 20th (and indeed 21st) century economies:

Fundamental errors of the Maastricht Treaty

Maastricht, in essence, attempts to solve the problem of creating a single currency by grafting a 19th century monetary system, with the same rigidity in exchange rates as a gold based one, onto a 20th century economy. By irrevocably fixing the ratios between national currencies (i.e. abolishing them), adjustments between different levels of productivity, and other factors affecting costs, can no longer take place via exchange rates – this, incidentally, would occur with any attempt to introduce a single currency, and not simply under the Maastricht Treaty. The only issue is ‘what type’ of adjustments will take place in the real economy.

If there existed a 19th century productive economy, to correspond to a 19thcentury concept of exchange rates, the price system could take the strain of adjustment. Regions falling behind in productivity, for example as with the UK due to low rates of investment, would reduce their prices relative to those in other regions. In order for relative prices to fall in these regions, firms would have to accept reductions in profits, labour would accept reductions in wages etc. In reality, of course, this will not occur – because the 19th century economy no longer exists. Firms engaged in imperfect competition/monopoly will respond, just as textbooks de scribe, and as the history of the 20th century demonstrates, not by reducing prices but by reducing output. Labour will not react with favour to reductions in wages. Recessions will multiply, regional imbalances will intensify, racism and xenophobia will spread, the trade unions will be attacked to attempt to reduce wages, the welfare system will be eroded to drive down costs, crime will soar as unemployment rises etc. The experience of the UK re-joining the gold standard, or of its ERM membership, will be repeated on a European scale.

All the phenomena, in short, experienced with the move to implement the Treaty of Maastricht will intensify to a qualitatively higher level. The mismatch between 19th century money and a 20th century economy, while an interesting ‘theoretical’ experiment, will be most unfunny to witness in practice.” 

But the events of the weekend confirmed, that despite the repeated depoliticizing attempt to shroud discussion of the issues in technocratic detail, this was never about making a coherent economic argument. As Greece’s ex-Finance Minister Yanis Varoufakis points out in the revealing New Statesman interview today:

It’s not that [my arguments] didn’t go down well – it’s that there was point blank refusal to engage in economic arguments. Point blank. … You put forward an argument that you’ve really worked on – to make sure it’s logically coherent – and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply. And that’s startling, for somebody who’s used to academic debate. … The other side always engages. Well there was no engagement at all. It was not even annoyance, it was as if one had not spoken.

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Ireland’s Lean Mean Job Creating Machine is Looking a Bit Flabby

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You’d think, listening to Ministers reeling off employment numbers and media reports of new job announcements, that Ireland was some lean, mean job creation machine. Well, in comparison with other EU-15 countries we are neither mean nor lean. Indeed, we fall well behind in key sectors.

Let’s leave aside the arguments over the 2013 employment numbers.  I suggested that they were inflated due to a statistical re-alignment between the Quarter National Household Survey and the Census (you can read those arguments here andhere).  If people want to believe that job growth in 2013 (when domestic demand fell) was higher than in 2014 (when domestic demand rose by nearly 4 percent) – well, sure, go ahead.  I prefer to take on board the CSO’s warning about interpreting job creation trends in 2013.

Robust comparisons can only start with the last quarter of 2013.  That’s when the CSO finished its statistical re-alignment.  Therefore, we have two year-on-year periods to compare.  We should be cautious interpreting this data; it would be preferable to have a longer time-series.  Therefore, any conclusions are tentative and subject to revision.

The following looks at the market, or business, economy.  This is essentially the private sector, excluding the public sector dominated sectors (public administration, education and health) and the farming sector.  Here are the year-on-year figures for 2014 to 2015 Quarter 1.

emplo_growth1

This doesn’t look so bad.  Ireland’s employment growth is above the EU-15 average and ranks 4th in the table.  However, something interesting happens when we exclude the construction sector which is non-traded and which in the past the Irish economy overly-relied on for job creation.

emplo_growth2

Ireland falls well down the job creation table when construction is excluded  – below the EU-15 average.

In the last year, the Irish market economy generated 29,700 jobs.  Of this, 19,500 jobs were in the construction sector – or 66 percent.

When we look at the previous quarter – the 4th quarter of 2014 – we find a similar pattern.

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Austerity Mark II, same as Mark I

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This article was originally posted in Socialist Economic Bulletin on Thursday, the 9th of July. 

Most media coverage of the Budget is predictably sycophantic and wrong. An objective assessment is that the amount of fiscal tightening planned in this Budget is exactly the same as outlined in the June 2010 Budget. The June 2010 Budget planned tightening of £40bn, but £3bn of this was the projected fall in interest payments. Total austerity measures were £37 billion. This time George Osborne has announced total fiscal tightening of £37 billion, with further details to be added in future Budgets.

Therefore the same result should be expected. The British economy is now 14% larger in nominal terms than it was in 2010, but the international economy is growing more slowly. Circumstances are not exactly the same then and now, but the impact of £37 billion in austerity will be broadly the same. If these plans are implemented growth is likely to slow as it did previously.

At that time in 2010 the economy was growing at a 2.2% annual rate. The imposition of austerity measures slowed that to just 0.7% in 2012 and the economy only narrowly avoided a rare ‘double-dip’ recession[i]. The stronger growth in 2013 and 2014 arose because there were no new austerity measures in the run-up to the General Election.

In that same 2010 Budget Osborne claimed the public sector net borrowing would fall to £37bn in 2014/15, or 2.1% of GDP. The outturn was actually £80 billion and 4.4% of GDP.[ii] In fact the deficit was on a rising trend in 2012 to £111 billion from £92 billion in 2011 as the economy slumped. It only started to fall once new austerity measures were halted and the economy could recover. Austerity did not cut the deficit. Growth did.

Austerity transfer of incomes

Austerity is the transfer of incomes from poor to rich and from workers to big business. Social protections (so-called welfare) are cut in order to drive workers to accept ever-lower pay. If people with disabilities can barely subsist, if the sick have subsistence incomes cut, if women have lower pay, increased burdens from worse public services and greater responsibilities as carers, this is regarded only as collateral damage, if at all.

In the £37 billion in combined tax increases and spending cuts over this Parliament, only £17 billion of that is specified in the latest Budget. Very large departmental cuts will be announced in the Autumn Statement and future Budgets, totalling £20bn. £12 billion of that £17 billion will come from cuts to social security protection, and another £5 billion is said to come from clampdown on tax evasion.

The claim that any of this has as its primary aim deficit reduction is belied by the cut in Corporation Tax to 18%. Even before this cut, businesses paid a token amount of total taxation. In the current year corporate tax receipts are expected to be £42 billion. This compares to a total £331 billion paid in income tax, VAT and council tax.

There is also a host of benefits to companies and the rich including more measures on Help to Buy, and rent a room relief to add fuel to the house price bubble. The Inheritance Tax threshold is raised to £½ million per person, up to £1 million per family on homes. Shareholders can receive £5,000 in dividend payments tax-free. Along with other changes, rich savers can now receive £17,500 a year tax-free. There is an increase in tax-free personal allowances and the main beneficiaries of all such measures are high taxpayers.

For the poorest, there are only ‘welfare cuts’. After 2017 there will be no additional tax credits, Universal Credit or housing benefit for families with more than two kids. New applications to Employment Support Allowance will be curbed, which is for people who are not fit to work. A string of further cuts to entitlements will only emerge slowly. The Financial Times has already shown that cuts to tax credits will hit ethnic minority communities hardest.

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Supporting Syriza

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Question: which Eurozone government has 61 percent public support for their position in the Greek bailout negotiations?  Answers on a small postcard.  

Last January Syriza won 36 percent of the vote, which allowed them to enter government as the senior coalition party.  Yesterday, 61 percent of the Greek people supported Syriza’s rejection of the terms laid down by the 18 other Eurozone governments.   There can be no doubting the Syriza Government’s mandate. 

The next week will be crucial in hammering out a deal – if that is possible given the intransigence of the creditors to date.  How can we, in Ireland, provide concrete assistance to the people of Greece?

We can look to the honourable behaviour of the Greek Finance Minister Yanis Varoufakis as a guide. This is not the time, however tempting, to use the referendum result for domestic political purposes.  The Greek people need concrete support.  We should be calling on the Irish Government to take up the following positions in the upcoming negotiations. 

First, we should demand that the Irish Government now engage constructively in the negotiations with Greece:  first, by calling on the ECB to comply with their own commercial mandate and provide the necessary liquidity to allow the Greek banks to open.  In the short-term capital controls and withdrawal limits would have to remain, but re-opening the banks would take the pressure off businesses and households.  Failure to do this is a coercive political act.  Opening the banks should be the Irish Government’s first diplomatic stop.

Second, the key short-term issue is budgetary – allowing the Greek government to run a deficit.  Given the humanitarian crisis and the collapsing of the productive economy, the demand for a primary surplus (i.e. more revenue than expenditure when interest payments are excluded) is not only penal and irrational; for creditors it is the surest way to guarantee that debts will never be repaid.  Greek businesses need space to start growing and employing; fiscal policy should be assisting, not thwarting this.

Third, the Irish Government should support the establishment of a European Debt Conference.  This does not commit any government to a particular position but it at least provides a space, outside the day-to-day politics of the Eurogroup and the EU, to consider medium-term solutions – not only for Greece and the peripheral regions – but for the entire Eurozone.  My own preferred solution would run along these lines, but the Irish Government need not take up any position prior to such a conference being held.

And, fourth, the Irish Government should support the release of structural funds already committed to Greece to kick-start a badly need investment programme.  This could also involve reframing the National Strategic Reference Framework to allow Greek businesses to access the funds allocated to them but denied because of inflexible rules.

These should form the core of any progressive campaign to re-align Irish Government policy:

  • Open the banks
  • Suspend austerity (the first step in getting rid of it)
  • Support a European Debt Conference
  • An investment programme for the Greek economy

The Greek government would still be under strict supervision and required to make progress on reforms:  rehabilitating the tax collection system, ending corruption and patronage, and ending the dominance of oligarchical control over economic sectors.  But this wouldn’t pose a problem for the Syriza government.  These policies already form the core elements of the programme they were elected on.  These reforms will take time and can only succeed when the economy and society are given the fiscal and political space to implement them.  Hard to do much when your banks are closed.

Let’s not demand too much.  The Irish government does not bring the biggest battalion to the Eurogroup.  But it has a potentially influential voice given our experience of a bail-out.  And given the importance of this issue (keeping the Eurozone intact) it is amazing there has not been a parliamentary debate over what position the Government should adopt in these negotiations.  This should change immediately.

The Irish Government should be required to come into the Dail and explain and debate its negotiating position.

We have an opportunity to push the default button.  When Syriza was elected in January, the Eurozone governments should have been relieved: for finally, there was a Greek government that was intent on tackling the issues of reform – corruption, the patronage, the oligarchical controls; reforms which the previous New Democracy and PASOK failed at (or didn’t even try).  That didn’t end well.

There has now been, in effect, a second election in the form of a referendum.  There is no doubting Syriza’s mandate.  Nor is there doubting their continuing commitment to the reform and modernisation of the Greek economy. 

Let’s start anew.  There is still time.  And the Irish government can play a pivotal role in that.

That is the least we should demand of our elected representatives the EU.

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Progressive Film Club: Palfest & “5 Broken Cameras”

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Progressive Film Club

Oscar-nominated “5 Broken Cameras” amongst the attractions in upcoming Palfest.

We finished our screenings for summer last Saturday and plan to resume in September or October. We thank you for your great support for our events.

In the meantime we will try to keep you posted on any upcoming films that might be of interest such as these that are being screened during the upcoming Palfest (full details from site).

SMALL HANDS IN HANDCUFFS

Wed. 8th July 2pm
The Pearse Centre
Admission Free, donations welcome

In October 2013, Anrai Carroll, a 16 yr old Transition year student travelled to the West Bank to make a film about child arrests in Palestine. Posing as tourists, Anrai and his mum, activist Brenda Carroll flew to Israel and travelled on to the West Bank where Anrai finally met Mahmoud, a boy his own age who was arrested at 14 and imprisoned for almost a year and a half, also Rasim, 18, who lives in fear of a knock on the door which could mean his arrest.

Anrai’s film shows not just the physical journey but the painfully emotional and sometimes scary transition from naive xbox player to a wiser and stronger young man. What started as a simple idea in Powerscourt Lawns, Waterford has grown into a global symbol of solidarity.

FLYING PAPER

Thurs. 9th July 4pm
The Pearse Centre, Dublin
Admission Free, donations welcome

Flying Paper tells the uplifting story of resilient Palestinian youth in the Gaza Strip on a quest to shatter the Guinness World Record for the most kites ever flown. This feature-length documentary film is directed by Nitin Sawhney and Roger Hill and co-produced with a team of young filmmakers in Gaza.

FIVE BROKEN CAMERAS

Fri. 10th July 4pm
The Pearse Centre, Dublin
Admission Free, donations welcome

A screening of Emad Burnat’s Oscar-nominated Documentary, – an extraordinary work of both cinematic and political activism, 5 Broken Cameras is a deeply personal, first-hand account of non-violent resistance in Bil’in, a West Bank village threatened by encroaching Israeli settlements. Shot almost entirely by Palestinian farmer Emad Burnat, who bought his first camera in 2005 to record the birth of his youngest son, the footage was later given to Israeli co-director Guy Davidi to edit. Structured around the violent destruction of each one of Burnat’s cameras, the filmmakers’ collaboration follows one family’s evolution over five years of village turmoil. Burnat watches from behind the lens as olive trees are bulldozed, protests intensify, and lives are lost. “I feel like the camera protects me,” he says, “but it’s an illusion.”

“It presents with overwhelming power a case of injustice on a massive scale, and gives us a direct experience of what it’s like to be on the receiving end of oppression and dispossession, administered by the unyielding, stony-faced representatives of those convinced of their own righteousness.” – Philip French, The Guardian.

OPEN BETHLEHEM

Sat. 11th July 4pm
The Pearse Centre
Admission Free, donations welcome

Armed with her camera and a dilapidated family car that keeps breaking down, filmmaker Leila Sansour plans to make an epic film about a legendary town in crisis but just few months into filming her life and the film take an unexpected turn when cousin Carol, Leila’s last relative in town, persuades her to stay in Bethlehem, her hometown she had left years before, to start a campaign to save the city.

As the pair launch OPEN BETHLEHEM, Leila finds herself trapped behind a wall in the very place she so much wanted to leave. The face of Bethlehem is changing rapidly with potentially detrimental consequences. Reports predict that if trends continue the Christian community of Bethlehem, a city that provides a model for a multi faith Middle East, may be unsustainable within one generation. Leila’s plan to stay a year stretches to seven.

OPEN BETHLEHEM is a story of a homecoming to the world’s most famous little town. The film spans seven momentous years in the life of Bethlehem, revealing a city of astonishing beauty and political strife, under occupation. The film draws from 700 hours of original footage and some rare archive material. In fact the making of this film has led to the creation of the largest visual archive of Bethlehem in the world and plans are currently being discussed with University College London (UCL) to turn the collection into a museum.

Website ;- http://www.palfestireland.net/

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