Class

#bankinginquiry

Irish Capital and the Banking Inquiry

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The Banking inquiry is now into its main investigation. It has been hearing evidence from senior bankers and department officials, and over the next couple of months we’ll finally get to hear from the politicians themselves. To date, the focus of the inquiry has been on the night of the guarantee and this is because it is still unclear as to what actually happened that night. Witness by witness, though, we are getting closer to finding out and coming to a conclusion regarding what was by far the biggest, and most disastrous, decision taken by any Southern Irish government since partition.

The guarantee of course is not the full story. National government policy from 1990 to 2007 regardless of the political makeup prioritized commercial and residential property speculation over genuine and cohesive social development. This was coupled with a loosening of financial regulation and the promotion of the south of Ireland as a de facto tax haven.

From 2002 to 2007, Irish banks started to compete with each other for the same small pool of developers. In order to grow quickly and leapfrog each other, Irish banks got involved in widely speculative land and commercial property ventures, using international wholesale funding to do so.

The shaky foundations of the growth was exposed by the 2007-2008 credit crunch. Irish banks couldn’t get access to international loans to pay off their earlier loans and this came to a head in September 2008.

Since then, the real struggle in the crisis has been not so much over its resolution – all crises come to an end sometime – but who pays for the resolution. And in the south of Ireland, those who paid were the ordinary citizens, while those who partied walked away from their obligations. And each day of the bank inquiry this becomes clearer – those who took out mortgages did not ‘party’, but the 29 developers with debts of €32 billion between them certainly did, before using the Government to dump those debts onto our shoulders.

The relationship between these developers and Irish finance is the essential dynamic of Irish capitalism, and the banking inquiry, almost in spite of itself, is looking at this institutional framework and the manner in which it operated.

The focus on individual developers and bankers, and, more recently, Denis O’Brien and Siteserv, has obscured somewhat this structural dynamic. Systems are of course operated by and developed through people, but in order for a system to reproduce itself it needs an institutional framework.

The inquiry allows us to peer under the bonnet of Irish capitalism and get a sense of how the machine works, its internal contradictions and outputs. We are beginning to see that the indigenous troika, the one that really matters, is the Central Bank, the Department of Finance and the Department of the Taoiseach.

The main clients of this apparatus are not the citizens of the State but the indigenous banks and the IFSC. The regulatory rules, tax laws and supposed strictures and censures – all are developed and written with the needs of finance in mind.

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Returning to the Business of Bonuses

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When everything came crashing down there was considerable discussion of the ‘bonus culture’; primarily but not exclusively in the finance sector.  Bonuses were tied to outputs that, while rewarding the individual (usually a senior management figure), played mayhem in the economy –as if the dispensing of loans for property speculation is a measure of commercial success.

Bonuses, in general, have been with us for a long time.  It actually started among workers and was paid out as ‘piece-meal’ work – the more you shovelled, the more you harvested, the higher the pay This benefited only a few, especially as the total pot of remuneration rarely grew – it was just redistributed (but it did get workers to produce more for their employers).  But as economies industrialised, bonuses became a phenomenon of management and those with special skills; and as the financial sector was deregulated, bonuses became associated with bankers – senior bankers.

Bonuses are justified on the basis of ‘rewarding performance’ or ‘attracting the talented’.  That’s the justification – a hypothesis rarely tested.  It can reward some aspects of work but it ignores others; they can attract some talent but demotivates other talent.  Employees rely on the fixed income of their wage – either the direct or social wage; bonuses can have a distorting effect and can leave employees reliant on HR whim no matter how dressed up it might be with metrics that aspire to measure productivity.

Whatever the justification, there is one thing we can be sure of:  bonuses benefit higher income employees; namely, managers and professionals.  Very little trickles down to workers on the shop and office floor, production line or building site.   The CSO used to measure bonuses by type of employee – not so anymore.  But we can reasonably assume that the share-out is much the same today.

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What is the Current Phase of Imperialism?

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A new situation requires a new analysis, and each new factor in the situation requires a specific and concrete analysis, placing it and its weight correctly in the overall situation.

In world politics, the new situation is that the US was unable to bomb Syria, it finds itself negotiating with, rather than bombing Iran, and its coup in the Ukraine may not be entirely successful in drawing Russia’s neighbour into NATO’s sphere of influence.

This overturns recent history. The overthrow of the Soviet Union in 1991 was accompanied by the US-led Gulf War. Since that time, the US and its various allies have bombed, invaded or intervened in Somalia (twice), Yugoslavia, Haiti, Afghanistan, the Philippines, Liberia, Iraq, the Maghreb, Yemen, Libya, Pakistan, Libya and South Sudan. The US has also led, organised or outsourced countless other interventions, overthrown governments and destabilised economies in pursuit of its interests. There has also been a series of coups and attempted coups in Latin America with varied success, and the so-called ‘colour revolutions’ in Eastern Europe to install pro-US, pro-NATO governments, as well as the US hijacking of the Arab Spring.

However, the economic rise of China has warranted a strategic ‘pivot’ towards Asia in an attempt to curb the rise of the only economy that could rival US supremacy in the foreseeable future. Given this absolute priority and the reduced circumstances of the US economy, it has been necessary to suspend new large-scale direct military interventions elsewhere.

This curb on US power has had immediate and beneficial consequences for humanity. Syria could not be bombed and neither could Iran. In these, Russian opposition to US plans was a key political obstacle, especially as the US wanted to deploy multilateral and multinational forces to do its bidding and needed the imprimatur of the UN Security Council. The US response to this blockage has been to increase pressure on Russia, most dramatically with its ouster of the elected Ukrainian government in a coup and its attempt to breach the country’s agreed neutrality by bringing it into NATO.

This curb on US power, however limited or temporary, should be welcomed by all socialists, by all democrats and simply by all those who desire peace. Instead, we have the strange spectacle that some on the left have raised the charge that Russia is imperialist, or that China is, or countries such as Brazil, or India or South Africa are ‘sub-imperialist’!

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In Defence of China

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This article originally appeared in Jude Woodward’s new blog, New Cold War on the 2nd of May. NCW deals with the USA’s attempts to launch a new Cold War against China. 

The United States has launched a confrontation with China that it is attempting to project as of Cold War dimensions. Its clear aim is to isolate China diplomatically and politically, threaten it militarily, force it to divert investment from the productive economy to military spending, exclude it from world markets and label it a ‘pariah’ state.

In pursuit of this, the US is decisively stepping up its naval and military presence directed at China – the so-called ‘pivot to the Pacific’. It is encouraging China’s neighbours to step up their own military spending and take a more aggressive stance to China. Initiatives like the Trans Pacific Partnership and the Transatlantic Trade and Investment Partnership are aimed at creating huge preferential trade blocs led by the US that specifically exclude China.

The US is trying to isolate China politically, not just at the level of states, but by confusing and dividing those that might otherwise oppose this offensive, particularly through hypocritical and exaggerated campaigns on China’s record on human rights and labour standards and presenting China as aggressive and expansionist when it responds to legitimate security concerns or local challenges.

The core of the US’s re-orientation to contain and confront China is a shift to station 60% of the US’s total naval capacity in the Pacific, the first time since 1945 that the majority of US forces will have been out of the Atlantic-Mediterranean arena.

To facilitate this the US has won agreement to a new base in Australia, up-graded its Guam facilities, negotiated with Japan to stay on in Okinawa, is building a major new base in South Korea, and has agreed with the Philippines that its ex-base at Subic Bay is once more at the disposal of the US navy. It has sold a new raft of arms to Taiwan, upped its deal for F-16s with Indonesia, strengthened its military alliance with Japan and encouraged the other countries surrounding China to re-arm.

The fundamental question that this American policy towards China poses is what position should the left, the anti-war movement and progressive forces world-wide take on the confrontation?

The answer should be crystal clear – to defend China against this imperialist offensive.

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Losers and Not So Losers

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It is often argued that the recession has been rough on all of us but that high income groups have had it the roughest.  European Commission Director István Székely came to Dublin late last year to assure us that the ‘the better-off sections of Irish society have borne the largest share of the brunt of the bailout programme’.  I don’t know whether this was intended to soften the blow as it were, making the austerity programme more palatable. I do know, however, that it is not true.   Dr. Székely is not alone; many have argued, using ESRI findings, that higher income groups have borne the greatest burden during the recession.  I will critique the ESRI findings below but first let’s go through some other evidence.

Wage Increases Higher income households have managed to increase their incomes, as noted in a recent Friday Stat Attack.

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This is not true for all sectors.  For instance, public sector managers and professionals have taken substantial hits in income. And there are compositional effects to take into account.  However, at a national level we see that this group has received a substantial increase in income compared to other workers whose weekly earnings have flat-lined.  Even if higher-income groups have taken a hit through tax increases they have managed to recoup a large part of this through increases in earnings.  This didn’t happen for most other workers, never mind those on social protection.

Unemployment

Losing one’s job is probably the biggest hit a household can suffer.  How have theselosses been distributed?

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Managerial and professional employment has actually increased during the period of recession while all other occupations have experienced a decline – in some cases, substantial declines.  And the occupational groups suffering a loss have lower income than the managerial and professional groups.   So lower income groups, on average, have been hit by the jobs recession much harder than higher-income groups.

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andthenisaid

How Do you Deliver Tax Cuts to Households Whose Income is so Low they Don’t Pay Income Tax?

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If the Irish Times report is correct, the Government is on track to implement tax cuts for ‘middle income’ families.  The Taoiseach is certainly keen on it:

‘“The priority will be to reduce the very high tax rates faced by families on middle incomes,” said Mr Kenny.’

What’s really interesting is that for many middle income families, tax cuts would be practically meaningless.  And what they need is not even on the agenda.

How much income do middle income households earn?  The following should only be seen as an approximation since it relies on income distribution data from the Survey on Income and Living Conditions which presents the information based on deciles (i.e. broken down on 10 percent categories).  Further, the latest Survey from 2011 doesn’t provide a decile breakdown; so this data is courtesy of Dr. Micheal Collins from the Nevin Economic Research Institute.  As well, the household breakdown comes from 2010 (again, as 2011 doesn’t present this data) – a breakdown for adults and children.  That’s why this should be treated as indicative.

This middle income lies in the 4th to 8th deciles, making up 55 percent of all adults and 60 percent of all children.  What is the average income for this middle group?

Avg_income

It ranges between €8,000 and €52,000 per household.  This refers to ‘direct’ income – income from PAYE work, self-employment and capital sources (e.g. capital gains).  This middle income group is made up of part-time workers, minimum wage workers, and the low-paid:  a household of two working adults would mean average gross wage of €26,000 each.  There would also be average and above-average income earners.

Data from the Revenue Commissioners is also helpful but there are some caveats.  There is a chance that there is double counting – where people might have part-time self-employment combined with part-time PAYE work.  Further, married couples are counted as one taxpaying unit.  And the data only includes those in work.  Notwithstanding these, the Revenue data corresponds with the above.

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The November Issue of Socialist Voice is Out Now

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The November issue of Socialist Voice is out now. Download it here, or view it online. Also available to read below.

  • Will we or won’t we? [EMC]
  • Departments I, II and III and economic crisis [NL]
  • Pension benefits wiped (part 2) [Brendan Ogle]
  • Printing money to support the debt bubble [NL]
  • James Connolly and 1916 [NOM]
  • There is an alternative (part 2) [EON]
  • Time for more independent leadership [NOM]
  • Rail and bus transport: Why nationalisation was the obvious answer [RNC]
  • Political statement
  • International Meeting of Communist and Workers’ Parties, Lisbon: Speech by Eugene McCartan, general secretary, CPI
  • The unseemly rise of Qatar [BG]
  • A serious defeat for workers and their union [TMK]
  • Willie Walsh floats again [MA]
  • Letter: Ionad Buail Isteach

Will we or won’t we?

It is now clear that the Irish state will leave the “bail-out” or restructuring programme some time in December. The Government is spinning the argument that when we eventually get the EU-ECB-IMF supervision off our backs we will “regain our sovereignty” and independent action.

The question has to be asked, When have we ever had full sovereignty and independence?

They are claiming that Government policies have worked to such a degree that they may not need any “precautionary credit line” from the European Stability Mechanism, the euro-zone rescue fund. For this state to get access to such funds would require parliamentary approval from a number of countries, including Germany.

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Belfast & District Trades Union Council Talk 2nd of May: Who Profits From Peace?

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Belfast & District Trades Union Council invite you to their Annual May Day Lecture:

Who Profits from Peace?

Thursday 2nd May at 7pm to 9pm

Belfast Unemployed Resource Centre

45/47 Donegall Street, Belfast , BT1 2FG

Will decent manufacturing jobs be replaced by low paid jobs in the finance and services industry?

The ‘double transition’ – towards peace and neo-liberalism – has been evident in the world of politics, finance, law and accountancy. This talk will examine who the winners and losers are in the peace process and will also explore ‘who really profits from peace?’

All welcome and talk will include a Q&A session.

Speaker: Dr Conor McCabe

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The Real Game Plan

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This was originally posted on Unite's Croke Park Report blog today.

Let’s take a step back from the details in order to see what is happening in the wider economy – which has now fallen back into a double-dip recession according to the CSO report today. The real game plan is to suppress wages in order to boost profits.

This strategy was first announced Budget 2009 under the Fianna Fail-led government which claimed there was no alternative to wage reduction. The current Government has maintained that strategy. We have seen a restructuring of Joint Labour Committees which has removed much of the protection accorded to low-paid workers in sectors such as retail, restaurants and hotels. And we know what the Government wants in the current Croke Park 2 proposals.

Further, the Minister for Finance has called for cuts of 6 to 10 percent in the banking sector, even though the Mercer Report showed that over 40 percent of all staff in the three covered banks (Bank of Ireland, AIB and PTSB) has an average wage of €30,000.

Profits, meanwhile, have been on the increase. In 2010 and 2011 combined profits rose by 11 percent. If we take a longer view – and compare wage and profit growth projections with the Eurozone average – this is what we find, courtesy of the EU Commission’s AMECO database.

There are two things of note in this:

First, Irish profit growth greatly exceeds that of average Irish wage growth. Irish wages per employee in 2014 is projected to be below what they were in 2008; Irish profits on the other hand will have grown by 30 percent. In the Eurozone wages and profits is projected to grow in tandem.

Second, Irish profits are growing at a faster rate than the Eurozone average while Irish wages are lagging far behind.

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SelmaJames

Audio: “How can women defeat austerity?” Selma James’ Talk at Maynooth, 13 March 2013

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“How can women defeat austerity?” – Selma James at Maynooth, 13 March 2013

An MA Community Education, Equality and Social Activism podcast, available on the Community Education, Equality and Social Activism (CEESA) website here.

Founder of the Wages for Housework campaign and coordinator of the Global Women's Strike, Selma James brought a lifetime of movement experience to bear in this electrifying talk. Asked to speak to organisers' needs in the current crisis, she spoke to a roomful of 30 activists and researchers passionately, clearly and incisively for an hour without notes.

To understand austerity, we have to understand the struggles which gave birth to the welfare state, the poverty which went before it and the attacks it has been under since the 1970s, and the first part of her talk tackled these themes. In the second part she discussed the weaknesses of movements since that time in responding to the attacks: how NGOisation has demobilised movements and left them dependent on funders, far-left parties try to substitute themselves for popular action while social-democratic parties simply represent a slower attack on people's basic needs. In the third and final part she discussed the urgency of building a broader movement which does not see class and gender, anti-racism or environmental survival, as separate and opposed issues. A lively and engaged discussion followed.

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The Biggest Symptom of a Problem

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The Office of National Statistics (ONS) in the UK have today released regional economic indicators. By bringing together data from a variety of sources, they provide a partial but very useful snapshot of where the economy under the jurisdiction of the Northern Ireland Assembly sits in relation to the British economy. The entire dataset is here and is very useful.

Below is the ONS chart on employment.

Oddly, repeated attempts to copy the full chart failed because the last item on the legend (directly below Scotland) kept dropping off. It’s Northern Ireland. In the chart, it is the orange line. Clearly, someone at ONS has a sense of humour.

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DEFENDING CARING AND WELFARE IN CARELESS TIMES – Selma James at UCD

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PRAXIS and Equality Studies are proud to announce that a Communiversity event will take place on Tuesday March 12th 2013 2.30 – 4.30pm E114, UCD Newman (Arts) Building where renowned activist and author Selma James will address the theme DEFENDING CARING AND WELFARE IN CARELESS TIMES. The event comes at a time when austerity policies, triggered by the global economic meltdown, are devastating already-burdened communities. In particular, the rights and entitlements hard-won over the years by carers, overwhelmingly women, are being senselessly eroded. Despite all of this, care work and other work that women must do for the survival of families and communities continues, unabated and uncelebrated.

Selma James is known for coining the phrase “unwaged” in the 1970s to describe the unremunerated care work done almost universally by women. She continues to address these and other inequalities in her work, and information on her new book Sex, Race and Class, The Perspective of Winning: A Selection of Writings 1952-2011, is available at the end of this press release. She is co-author of the women's movement classic The Power of Women and the Subversion of the Community. James founded the International Wages for Housework Campaign and is coordinator of the Global Women's Strike. She is also the widow and former colleague of influential historian CLR James.

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Prof. Terrence McDonough on the Irish Promissory Note Deal – Galway 12 Feb 2013

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Audio recording of Prof. Terrence McDonough’s talk in Galway tonight, “What the !$%! just Happened? A Discussion on the Recent Debt Deal.” Thanks to Vicky Donnelly of Galway Debt Justice for organizing the event.

Main Talk

Mcdonough12-02-13-talk by Conormccabe on Mixcloud

Q&A

McdonoughQ&A-12-02-13 by Conormccabe on Mixcloud

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