Austerity

SocialWelfarePayments

The War on Wages Spreads to Social Protection Payments

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This post originally appeared on Unite the Union’s Croke Park Report blog today. It is a follow-up to the previous post War on Wages.

Francis Byrne of OPEN made an excellent point in a tweet regarding the previous post on the war on wages:

‘Which will also of course inevitably provide a rationale for reducing weekly SW (social welfare) payments.’

This is a crucial point. Cutting wages hits social protection recipients – unemployed, old age, single parents, the invalid and sick – in two ways.

First, there is a reduction in tax revenue. In the private sector when pay is cut by €100, the state loses nearly €42 ((nearly €63 if the employee is in top tax rate). In the public sector the loss to the state is even higher given the pension levy and pension contributions. This leaves the Government with less revenue and, so, puts pressure on spending.

Second, wage cuts can drive down workers income towards social protection levels. Using the ‘incentive-to-work‘ argument, some will argue that social protection must be cut so that work ‘pays’.

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Damaging Impact of Croke Park 2

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This post is written by Michael Burke, former senior international economist with Citibank and currently an economic consultant. It was originally posted on UNITE's Croke Park Report blog today.

The implementation of Croke Park 2 will have a very damaging impact on the economy and jobs, and as a result will struggle to have any beneficial impact on government finances at all.

That is the verdict based on the experience of austerity measures since 2008. Over that time and until the end of 2011 there were €14.6 billion in spending cuts and tax increases. On the same cash basis GDP fell by €23.6 billion.

This means that for every €1 in austerity measures the economy contracted by €1.6 as workers and businesses, pensioners and others responded to government cuts by making cuts in their own spending and investment. If the response to Croke Park 2 follows that pattern, the economy will contract by about €1.6 billion.

This will lower living standards and hurt jobs way beyond the public sector. Every public sector worker is a consumer of private sector goods and services. Private sector businesses will cut back on investment even further if demand for their products is declining.

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Action Plan 2013 – ‘The Gathering’ Writ Large

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Paul Murphy MEP and David Murphy of the Socialist Party provide a critical appraisal of the government’s Action Plan 2013 and argue that Ireland needs a radically different action plan.

Another year and another instalment in the Action Plan for Jobs from the government. After the self-proclaimed sensational success that was the 2012 action plan, with 92% of its targets being hit, unemployment still stands at over 14%. Self-congratulation is no congratulation.

With over 87,000 people having emigrated since the last Action Plan was launched, what does Action Plan for Jobs 2013 have to offer? Well, not a lot, despite containing 333 ‘actions’ to build on last year’s 270 ‘actions’. It continues to outline the next steps in the government’s plan to create 100,000 new jobs by 2016 and makes a big effort to be savvy by using the latest business jargon like “Disruptive Reforms”.

It contains some of the government’s favourite catchphrases like “governments don’t create jobs…but create the environment for jobs to be created” and Enda Kenny’s mantra of making Ireland “the best small country in which to do business”.  It contains lots of lofty ambitions, but in effect doesn’t contain a lot of ideas to actually get people back to work. It is a plan firmly anchored within a neo-liberal framework, calling for less regulation and  tax cuts for businesses together making Ireland more 'cost competitive', while hoping for a major increase in Foreign Direct Investment.

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The Immiserizing Growth Principle

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John Weeks posted a good article yesterday on Social Europe Journal, which challenges the idea, repeated by an SPD candidate for the German Chancellorship that Ireland is the ‘star pupil’ of the Eurozone. Weeks challenges what he refers to as the ideology of mercantilism and “immiserizing growth” which lays the emphasis on increasing exports while also increasing poverty.

In effect, these externally-imposed, government-generated surpluses take goods and services from residents and transfer them to foreign governments, banks and corporations. This type of trade surplus falls into the category of what Jagdish Bhagwati, the famous Indian economist (now at Columbia University), termed “immiserizing growth”, economic growth that generates poverty not improvement for a population. To put it simply, the country exports and the population grows poorer.

Today, data illustrating the effects of this policy has been published by the CSO.

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EU Presidency Counter-Summit 2013

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The Counter-Summit Phenomenon – Forums for resistance and alternatives

Since the anti-globalisation movement of the late '90s and early 2000s, wherever the political representatives and economic thinkers of capital met, they encountered protest and opposition. From Seattle to Genoa, tens of thousands turned out to demonstrate against institutions like the WTO, G8 and EU. The anti-worker and environmentally unsustainable implications of their free trade and neo-liberal agenda were exposed.

With the understanding of the limitations of the model of protests at summits across Europe, came the rise of counter-summits. Generally called Social Forums these were an opportunity for socialists, trade unionists, environmental activists and others to meet. They represented an attempt to go beyond simply protesting against these institutions and to formulate alternatives as well as to discuss strategies for resistance.

The World Social Forum in Porto Alegre in Brazil which 12,000 people attended opened the process of the WSFs. It was followed with successful events in Athens, Mumbai, Nairobi and elsewhere. After playing a vital role in mobilising for the demonstrations on 15 February 2003, where tens of millions marched against a war on Iraq, the summits suffered a general decline, becoming somewhat disconnected from the real struggles happening around the world.

The model was successful in opening an important discussion, but it also contained within it an important contradiction that was always present in the anti-globalisation movement. This was the tension between an approach that was fundamentally reformist, aiming to curb the worst excesses of globalisation and capitalism and a more consistent anti-capitalist position. The formal exclusion of political parties did not keep out the various NGOs connected to Social Democracy and the reformist ideas associated with them, while revolutionary socialists were not able to openly organise.

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The Truth about the Deficit

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The following letter was sent on Monday by Paul Murphy MEP to Minister Varadkar, to clarify the facts made on the January 27th episode of The Week in Politics. The program can be watched on the RTE Player for any who missed it.

Dear Minister Varadkar,

I hope you are well. Yesterday on ‘The Week in Politics’, we disagreed over a number of factual issues to do with the level of the primary deficit and the impact of a repudiation of debt. I would like to detail here the sources for my statements, which I stand over. I intend to publish this letter on my website (www.paulmurphymep.eu) in order to allow people to see the relevant figures.

I asserted that the primary deficit for 2013 was, according to government figures, slightly over €3 billion. This is confirmed by the government’s ‘Medium Term Fiscal Statement’ from November 2012. The table on page 26 puts the General Government Primary Balance for 2013 at -€3,250 million, i.e. a primary deficit of €3.25 billion.

A separate figure is also given on that page of an ‘Exchequer Balance’ which gives a primary deficit in 2013 of €8 billion. Which figure is more accurate? Table 1c of the ‘Ireland – Stability Programme Update’ from December 2009 answers as follows:

“The General Government Balance (GGB) measures the fiscal performance of all arms of Government, i.e. Central Government, Local Authorities, Health Boards (prior to 2005 – their replacement, the HSE, is part of the Exchequer), Vocational Education Committees and non-commercial State sponsored bodies, as well as funds such as the Social Insurance Fund and the National Pensions Reserve Fund which are managed by government agents. It thus provides an accurate assessment of the fiscal performance of a more complete “government” sector.” (my emphasis)

It seems to me to be clear that the figure of the ‘General Government Balance’ is the figure that should be used.

In addition, I asserted that if we refused to pay the €9.1 billion in payments and the bailed-out bank bond payments this year, we would not need to borrow on the international markets and could in fact have public investment in jobs. Regardless of your political position on whether this is a viable strategy or not, I believe this to be self-evidently factually true.

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Lost Opportunity

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Perspective of a ULA national steering committee member

The 2011 general election gave the Irish far left its highest profile in decades. Five TDs were elected under the electoral banner of the United Left Alliance (ULA), reflecting growing anger against the austerity imposed by the previous government’s agreement with the “Troika” of the European Commission, the International Monetary Fund, and the European Central Bank.

During the campaign, I was strongly critical of the ULA’s overtly reformist election platform, which did not even mention the word “socialism”. This omission was made explicit by Ann Foley, the ULA candidate for Cork North West and a well known participant in People Before Profit (PBPA), one of the ULA’s founding organisations:

“I feel the ULA has very common sense policies. When people think of socialists, they think of communism, which is not the case. There is nothing dramatic or revolutionary about our policies. A lot of countries have functioning social democracies, especially in Scandinavia. They have great health, transport and childcare systems. This is the direction we want to take, a direction this Government failed to follow.”
(Cork Independent, 6 January 2011)

The decision to move beyond a reformist electoral lash-up by opening up membership to individuals and initiating a process supposedly aimed at the creation of a new working-class party, however, encouraged me to join. I saw this as an important opportunity to discuss the revolutionary socialist programme that the working class so desperately needs. Since then, I have participated in that discussion in ULA meetings at all levels and on my blog (revolutionaryprogramme.wordpress.com), and have twice stood for election to the national steering committee (NSC). In October 2012 I was elected onto the NSC to represent non-aligned members, ie, those not in one of the ULA’s founding organisations.

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Let’s Remind Ourselves that Downsizing the Public Sector is Economically Daft

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With negotiations over an extension of the Croke Park Agreement starting today, it is helpful to remind ourselves how daft it is to downsize the public sector payroll in the hopes it will reduce the deficit.

There are two ways to downsize the public sector payroll: cut public sector employment and/or cut public sector pay. Since the crisis began, we have been doing both. Public sector pay has been cut twice through the pension levy and the wage cuts of Budget 2010. Public sector employment has been cut by approximately 29,700 since late 2008, or 9.3 percent.

Yet, the Government finds that it must cut more than it had already planned. It needs €1 billion more in austerity measures to achieve their targets. It’s like running in quicksand – cut, sink, cut some more.

Yet, downsizing the public sector produces little benefit in stabilising public finances. Why? Because it is so darned deflationary – it bleeds the economy of employment, consumer spending and growth. When you factor in the economic consequences of the cuts, you find the Exchequer hasn’t saved as much as it hoped.

Let’s look at the estimates from the ESRI.

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Six Points in Croke Park

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As talks for a new Deal begin here are a half-dozen things you probably know about the Croke Park Deal that should stop the unions extending it.

  1. The Croke Park Deal seems to set up a conflict between pay and job security, on the one hand, and services to the public and the needy on the other. (Of course the real conflict is between pay, job security and services on the one hand and the billions given to the banks on the other. Nevertheless this does not stop the media head fixers from using the structure of the Croke Park Deal to pitch services against pay, job security and conditions. The alternative is for the unions to fight against cuts in services and jobs, wages and conditions.)

  1. The Croke Park Deal seems to accept cuts in services in return for a jobs and pay guarantee. (This impression is reinforced by the lack of union resistance to the cuts and, indeed by point 3 below).

  1. The Croke Park Deal facilitates the cuts in services through co-operation with restructuring and transferring to cover for the reduced staffing.

  1. The Croke Park Deal agrees to massive reductions in (decent and unionised) jobs at the very time when every job is needed and in contradiction to the trade union policy of state-led investment in growth and jobs. (“Public Service Numbers are now [September 2012] 28,000 lower (at 292,000 approx) than their peak (of 320,000 approx) at end 2008”(Progress on the implementation of the Government’s Public Service Reform Plan, 6th September 2012]).

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Translation: Are the Mareas a new trade unionism?

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Translation of an article published on the Madrilonia website on the 10th of January which asks Are the Mareas a new trade unionism?

It describes how the forms of networked democratic participation that spread after 15M have been a feature of the Marea Verde [Green Tide] and Marea Blanca [White Tide] – massive militant mobilisations in defence of public services, in education and health, respectively.

Last September one year had passed since the birth of the Marea Verde in defence of public education. A year later we can say that the phenomenon of the Mareas is not an isolated thing, but rather constitutes (with the Marea Blanca as its best expression) a new organisational reality. We want to identify some of its peculiarities so as to answer the initial question: do the tides prefigure a new trade unionism?

1. From defence of what is public [lo público] to communities

The essential difference in the movement of the Mareas from the traditional conceptions of trade unionism is in having abandoned the defence of public services as corporate conflicts linked exclusively to the immediate pay demands of professionals. The success of theMarea Blanca and Marea Verde mobilisations is due to the fact they have managed to open up the problem of cuts to society as a whole. By appealing to communities as the ultimate defenders of public services, there is an introduction of the idea that health or education are common matters that by necessity must be defended by everyone.

By opening up the problem to society as a whole, the frontier between users of a service and the professionals who provide it begins to break down. The basic notion is established that health centres, schools and hospitals are spaces for and belonging to everyone. This breaks with the idea that a public service is the sole responsibility of the government.

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Reilly’s Jew: What ‘austerity’ really means #1

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In Michel Foucault’s book Discipline and Punish there is a phrase that fascinates me: ‘a small penal mechanism’.

‘At the heart of all disciplinary systems functions a small penal mechanism’, he says.

The sentence came to mind recently when I heard that the Irish government was introducing a €75 charge for each round of chemotherapy. The charge is nicely judged: it will only apply to those cancer patients who are not poor enough to qualify for a medical card (free treatment) but are too poor to be able to afford private medical insurance. They have, perhaps, given up insurance in these times of austerity in order to feed their kids, and now faced with the terrifying prospect of cancer they must reassess the situation. It is a game of exquisite torture.

I’m reliably informed that chemotherapy can involve anything from a handful of rounds to dozens or even hundreds.
What does this particular form of ‘austerity’ tell us about the people imposing the charge?Minister Dr James Reilly – the man who closes down public nursing home beds while simultaneously being a shareholder in a private nursing home, the man who was listed in Stubbs Gazette recently as an undischarged debtor in relation to a €1.9 million debt on a nursing home – has cast around in his health budget of €1407,8000,000 (or €1.4 bn) and found a group of people who will try to pay up no matter what because the alternative is unthinkable.

What’s more, they’ll never be on the streets protesting. The big man (and Reilly is big) picked a fight with the sick child.

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