Economy

Top 4 Tips To Pick The Best Casino Online

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With thousands of options at hand when it comes to online gambling venues, many experienced players and newcomers have a hard time picking the ones that can best suit their needs. Luckily, specialists have thought…

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Top 4 Tips To Pick The Best Casino Online

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With thousands of options at hand when it comes to online gambling venues, many experienced players and newcomers have a hard time picking the ones that can best suit their needs. Luckily, specialists have thought…

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Initial Thoughts on the Results of the Greek Elections and Lessons for Ireland

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The Greek Elections’ Results

The number of the people that did not vote is the largest one in the elections history so far. This is to do with the capitulation of Tsipras, and the enforcement of the left TINA, as well as with financial restrains for the voters that had to travel.

Syriza’s victory was not based on ‘hope’ or any expectations for a more socially just governance. It was a personal victory for Tsipras, which tapped into the emotional “he’s a good kid, the EU were hard on him, at least he negotiated hard” on one hand, and the more moderate, centrist “Now that he got rid of the left burden, he will be more sensible and the government will be more stable” on the other. The new left TINA, in particular, played a role in reversing the radicalisation of large groups of the Greek population (especially the young, and working class urban areas), and appealed to the collapsing middle classes. “Stability” has entered Syriza’s vocabulary.

Tsipras’ victory was also based on the ideological and organisational defeat of the left alternatives. KKE’s stance in the memorandum sounded like a broken clock that tells the time correctly twice a day, but they failed to support and express the OXI. LAE (Popular Unity) ran for the elections attempting to express the OXI, while at the same time attempting to revive Syriza’s -in my view bankrupt- programme. However, their focus was on humourous TV spots, rather than the programme itself and the fact that it was mostly a party/front of prominent ex Syriza MP’s that have not addressed what their role in the Syriza government was turned a lot of people off. Antarsya-EEK, going through a split (with ARAN and ARAS siding with LAE), got a few thousand votes more than they did in the January elections. However, their programme needs to be substanciated. It also has not reached the wider population (partly due to the small organisation and lack of access to the media) and they failed to present it in detail. In this sense, Antarsya is seen as a useful force for the struggles, but not good enough as a parliamentary force.

A separate mention to the declining votes of Golden Dawn is necessary here. Golden Dawn did not manage to grow in an environment, which is characterised by disappointment on one hand, and the refugee crisis on the other. Even though their votes were higher than last elections on the Islands of Kos and Lesvos, they were not significantly higher and they were mostly votes that came from other right wing parties, such as New Democracy. It is also important to stress that dispite their attempts they have not managed to build a fascist movement on the streets as their presence, on those islands too, is very limited and they are outnumbered by the activists standing in solidarity with the refugees.

In all, the 2.86% (155000 votes) of LAE. the rise of votes to Antarsya-EEK (by 4200 votes), as well as smaller maoist and troskyist parties, such as the ML KKE-KKE (ml) coalition and OKDE, and the stability in the votes of KKE would not allow anyone to say that the Greek left is dead and buried, far from it. This is evident especially in comparison to the losses of votes for Syriza, and the establishment parties. Syriza lost 320000 votes, while New Democracy lost 192000,To Potami lost 151000, Golden Dawn 8800.

Regardless of the voting outcome, I believe, discussions and other collaborative efforts from a movement-building perspective between LAE and Antarsya-EEK and other anticapitalist organisations-parties will take place the following period, as the struggle against the 3rd Memorandum will start unfolding.

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The Desert of the Irish Debate

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There is an old American saying:  if you have nothing to say, wrap yourself up in the American flag and recite the constitution.  In Ireland, today, if a politician, a political party, has nothing to say, no new ideas to advance, then call for tax cuts.  The current deluge of leaks in the media about impending tax cuts are not evidence of sources having something to say; it is evidence of how the debate over future economic and social strategy has been turned into a desert.

And what tax is being hammered?  The most efficient, transparent, potentially progressive tax we have – a tax that even an army of accountants acting on behalf of the rich can’t get around:  the Universal Social Charge.  It is called a hated tax, an unfair tax, an anti-entrepreneurial tax.  Everything that is wrong with our income tax system is blamed on the USC whereas the reality is that the USC has the potential to repair much that is wrong with our income tax system, distorted and misshapen by the myriad of reliefs, allowances and exemptions – most of which benefit high-income groups.

People have been put under pressure from the tax increases during the period of recession.  It was irrational to reduce people’s take-home pay when economic growth was falling, wages were being cut in real terms, working hours and income supports (e.g. Child Benefit) were being cut.  Between 2008 and 2012, the effective tax rate rose by 30 percent.  This was a major contributor to lengthening and deepening the recession.

Today, however, the issue is not ‘high taxation’; it is that people’s living standards are low by EU-15 standards.  The debate over cutting taxes, however, shows how incapable political parties are of addressing this issue.  Rather than admit intellectual impotence, they propose tax cuts – which will only exacerbate the very problems they are incapable of addressing. 

Tax Cuts:  Giving More to Those Who Have More

Ireland has one of the highest levels of market inequality in the OECD.  As the recovery becomes embedded we are in danger of accelerating this trend.

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The need to clarify the left on budget deficits – confusions of so called ‘Keynesianism’

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This article was originally published in the Socialist Economic Bulletin on Monday, the 14th of September.

John McDonnell, the new Shadow Chancellor, has created something of a stir by his firm opposition to budget deficits to cover current expenditure – writing ‘let me make it absolutely clear that Labour under Jeremy Corbyn is committed to eliminating the deficit and creating an economy in which we live within our means.’ The so called ‘Keynesian’ left has attempted to make a point of defending budget deficits, presenting this as a hallmark of the left. These latter views are politically damaging because they are economically false. Neither do they derive from Keynes but from the confused views of academic pro-capitalist economics. John McDonnell is entirely correct on this point to oppose borrowing to cover current expenditure over the course of the business cycle.

The following article, originally published as ‘A damaging confusion in Western economics books – which followers of Keynes and Marx should correct’ deals with this issue from a fundamental economic point of view. A more comprehensive treatment of the issue, presented in a less technical fashion, can be found in my article‘Deng Xiaoping and John Maynard Keynes’.

Hopefully John McDonnell’s firm stance on the budget deficit will help the left to adopt the positions of Keynes and Marx and abandon the confused ideas on budget deficits that were wrongly presented under the name of ‘Keynesianism’.

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Could We Have a Little Bit of that Corbynomics Over Here?

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Jeremy Corbyn is now leader of the British Labour Party.  A Sunday Times article likens Jeremy to Caligula – an insane, murderous tyrant who appointed his horse Consul.  According to the Tories, he is a threat to Britain’s national security, economic security and, well, galactic security (watch out for those Corbynite Klingons).  Well, at the risk of Roman despotism and an alien invasion force landing on the Blaskets could we please have a little bit of Corbynomics here in Ireland?

For at the heart of Corbynomics is something quite modest:  a modernising investment drive to re-tool the UK economy.  It is a testament to the perversity of a debate that investing in high-speed broadband, public transport, social housing, school and hospital construction, green technology can be labelled as extremist.  Does anyone really suppose that British businesses would be outraged if they had a world class broadband system?  Or that the economy would dive into the abyss if more energy came from renewable resources rather than fossil fuels? 

Maybe the extremism comes from other aspects of Jeremy’s proposals.  Renationalise the railways and energy companies?  Yeah, so extreme that even a majority of Tory voters support renationalisation.  Combat multinationals’ aggressive tax planning and avoidance?  Yeah, forcing companies to pay taxes like the rest of us.  Build low-cost housing in London?  I’m sure tenants would be up in arms.  Everywhere you look in Corbynomics, you see common sense. 

Even orthodox commentators would seem to agree:

‘It is hard to exaggerate the decrepitude of infrastructure in much of the rich world.’

So begins a provocative article in the Economist, not noted for alarmist language.  It points out:

  • One in three railway bridges in Germany is over 100 years old,
  • So are half of London’s water mains.
  • In America the average bridge is 42 years old while the American Society of Civil Engineers rates around 14,000 of the country’s dams as ‘high hazard’ and 151,238 of its bridges as ‘deficient.

Such a state of affairs is not only highly inefficient, but potentially very dangerous.

Public investment is well down throughout Europe, the US and Ireland.

Corbynomics

Almost all EU countries have significantly cut their public investment budgets – especially those countries that needed it most:  the poorer Mediterranean countries, Ireland, Romania. 

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The €2 Billion Start

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Today, Unite has published its 2016 pre-budget submission.  You can read the full submission here and the summary here.  In short, it calls for a €4.8 billion budget package comprising a €1.9 billion increase in expenditure on public services and social protection, a €550 million increase in public investment and focused tax reductions on the low paid (e.g. reform of the PRSI step-effect, refundable tax credits and indexation) worth €220 million.  This is to be paid for by tax increases on wealth and capital, along with increases in the social wage (employers’ PRSI) and the fiscal space allowed under the EU fiscal rules.

However, I want to focus on one particular proposal in the submission:  the temporary, once-off investment programme of €2 billion for social housing; in particular, focusing on the homeless and households with special needs.

This has been discussed previously on this blog.  Back in April 2014 I suggested that instead of the Government spending €7.1 billion on paying down debt, it should invest half of this into a special once-off investment programme in social housing.  The actual turnout for 2014 was €5 billion used to pay down debt.  At that time I wrote:

‘Let’s start with the conclusion: if by this time next year if there are people still homeless, it’s because the Government made a policy choice.  And the policy choice was to tolerate homelessness.’

Back in May 2014 Fr. Peter McVerry warned of a ‘tsunami of homelessness’:

‘In all the years I have been working with homeless people; it has never been so bad. We are, even I would say, beyond crisis at this stage.’

16 months later the situation has become worse. 

A comprehensive housing programme, one that addresses the myriad of issues such as homelessness, local authority waiting lists, rising rents and limited supply, house prices, planning, land prices – this is a big, big subject and is not amenable to sound-bite policies.  It will require joined-up strategies, long-term thinking and the intellectual courage to go beyond the ‘housing as just another market good’ thinking that dominates policy-making.

However, with winter coming on and more people becoming homeless, sleeping rough and / or living in wholly inadequate accommodation, we need short-term stop-gap remedies.  That’s the thinking behind Unite’s proposal for a €2 billion once-off investment programme – to address this immediate crisis. 

There are any number of options open to the Government in using this €2 billion:  fast-tracking refurbishment, acquisitions of short-term tenancies, conversion of idle buildings, extensions of current emergency accommodation, etc.  The key is that accommodation can be brought on stream quickly and efficiently.  One hopes that it is not too late.

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Reflections on Irish Water

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Despite its small size, the Emerald Isle, situated between England and America, boasts more than 12, 000 lakes, or loughs. The largest lake in the British Isles, Lough Neagh, is in Northern Ireland, reputed to be formed when the sod of earth that Fionn MacCool dredged up to throw in combat at a fellow giant, displaced water inland from the Irish Sea.

Lough Corrib and Lough Mask contend for first place in the Republic. Strangford Lough, a bird sanctuary, and Lough Hyne, a Marine Nature Reserve, are both sea-water lakes. The rest are regularly refilled by famously high levels of precipitation that seep into the ground. An abundance of streams and rivers are also found. No other country in Europe contains more bog-land. Twenty per cent of Ireland’s territory once consisted of bogs.

Ireland is completely surrounded by water. It is divided from Britain and Scotland by the Irish, or Manx, Sea, containing the Isle of Man, Anglesey and other islands. The Irish Sea meets the Atlantic Ocean, lapping remaining shores, through the North Channel, or Straits of Moyle, facing Scotland. It meets the Celtic Sea at the southerly St. George’s Channel, stretching out to France.

The copious rainfall irrigates the land to grow vegetation decked in forty shades of green. The temperate oceanic climate keeps the weather mild and moist, preventing temperature extremes. The North Atlantic Current flowing nearby bestows the year-round advantages of an ice-free coastline, and warmer temperatures than are enjoyed in other places on the same latitude. There are between 151 and 225 recorded wet days, receiving more than 1mm of rain, out of every 365 days of the year, with most falling in the west. Ireland is not short of water.

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Einstein’s Socialism

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Einstein’s progressive views inevitably made him face the fundamental in our times question of socialism. He dealt with it in his extremely important article “Why Socialism?”1, published in the first issue of Monthly Review in 1949. In it Einstein explicitly declares in favor of socialism, recognizing its superiority over the capitalist system.

Einstein came to be interested in socialism through realizing that the present social order does not promote culture and through his understanding of the deep despair and hopelessness experienced by many people. He recounts in the article an enlightening incident from a conversation he had with an acquaintance, who had expressed his indifference about the eventual destruction of humanity after a relevant remark by Einstein. He makes an accurate diagnosis of the social crisis: “Innumerable voices have been asserting for some time now that human society is passing through a crisis, that its stability has been gravely shattered. It is characteristic of such a situation that individuals feel indifferent or even hostile towards the group, small or large, to which they belong”.

From this starting point, Einstein came naturally to the question of the feasibility and the historical need of another, socialist order. And with his usual mental integrity, he replied it in the affirmative when he was convinced that there is no other way to save human civilization.

In “Why Socialism?” Einstein does not only sharply condemn capitalism. Even more significantly, he adopts, to a large extent, the Marxist analysis of the capitalist system, criticizing its exploitative character and its other derivative afflictions, such as the concentration of wealth in the hands of a few, crises, unemployment and the manipulation of public opinion. His judgments on the principle of profit and other currently dominant values of wild market capitalism are quite interesting

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Corbynomics and Crashes: Investment Versus Speculation

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This article originally appeared on Socialist Economic Bulletin on the 2nd of September

Words matter. But in economic discussion as elsewhere they are frequently abused. In economic commentary one of the most frequent falsehoods is to describe speculative activity as investment. Stock market ‘investors’ are in fact engaged in speculative activity. There is no value created by this speculation. The claim made by its apologists that it provides for the efficient allocation of capital to productive enterprises is laughably untrue in light of both recent events and long-run history. In fact, a vast number of studies showthat that there is an inverse correlation between the growth rate of an economy and the returns to shareholders in stock market-listed companies.

The chart below is just one example of these studies, Fig. 1. The research from the London Business School and Credit Suisse shows the long-run relationship between real stock market returns and per capital GDP growth. The better the stock market performance, the worse the growth in real GDP per capita. The two variables are inversely correlated.

The Economist found this result ‘puzzling’. But it corresponds to economic theory. The greater the proportion of capital that is diverted towards speculation and away from productive investment, the slower the growth rate will be, and the slower the growth in prosperity (per capita GDP).

Fig.1 Stock market returns and per capita GDP growth
 

This is exactly what has been happening in all the Western economies over a prolonged period. SEB has previously identified adeclining proportion of Western firms’ profits devoted to investment. The uninvested portion of this capital does not disappear. Instead, it is held as cash in banks and the banks themselves use this to fund speculation and share buybacks by companies (which simply omits the banks as intermediaries in the speculation). The effects of this are so marked that some analysts believe ‘financialisation’ is the cause of the current crisis, when instead it is an extreme symptom of the decline in investment and the consequent growth of speculative activity.

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No China’s economy is not going to crash – why China has the world’s strongest macro-economic structure

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This article originally appeared in Socialist Economic Bulletin on Tuesday, 1 September 2015.

A great deal of highly inaccurate material is currently appearing in the Western media about the ‘crisis’ of China’s economy – an economy growing three times as fast as the US or Europe. This follows a long tradition of similarly inaccurate ‘crash’ material on China symbolised by Gordon Chang’s 2002 book ‘The Coming Collapse of China’.

The fundamental error of such analyses is that they do not understand why China has the world’s strongest macro-economic structure. This structure means that even if China encounters individual problems, such as the fluctuations in the share market or the current relative slowdown in industrial production, which are inevitable periodically, it possesses far stronger mechanisms to correct these than any Western economy. This article is adapted from one published in Chinese by the present author in Global Timesanalysing the greater strength of China’s macro-economic structure compared to either that of the West or the old ‘Soviet’ model. The original occasion of the article was the next steps in the development of China’s next 13th Five Year Plan. The analysis, however, equally explains the errors of material currently appear in the Western media.

*   *   *

In October a Plenary Session of China’s Communist Party (CPC) Central Committee will discuss China’s next five-year-plan. This provides a suitable opportunity to examine the reasons for China’s more rapid economic development than both the Western economies and the old Soviet system.

Taking first the facts which must be explained, China’s 37 years of ‘Reform and Opening Up’ since 1978 achieved the fastest improvement in living standards in a major country in human history. From 1978 to the latest available data real annual average inflation adjusted Chinese household consumption rose 7.7%. Annual average total consumption, including education and health, rose 8.0%. China’s average 9.8% economic growth was history’s most rapid.

As China’s ‘socialist market economy’ achieved this unmatched improvement in human living conditions it is this system which must be analysed. Its difference to both the Western and Soviet models explains why China’s economic development is more rapid than either.

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Cameron’s Swarm is Europe’s Solution

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David Cameron labelled them a ‘swarm’. Thousands of them have died in the Mediterranean.  Border fences are being built to keep them out:  Hungary, Spain, Bulgaria, Calais.  The Slovakian Government will take a handful of them but only if they are ‘Christian’ (apparently they don’t do Muslims or Mosques).  And all the while millions are being spent  on aperverse mini-stimulus – as ‘defence contractors, outsourcing companies and security forces find willing buyers for their security-based “solutions”, bringing new surveillance systems, patrol vessels, co-ordination centres and detention facilities to the market with little scrutiny or due diligence.‘  A rational political and economic response gives way to militarisation.

This is what has been labelled the ‘migration crisis’ – as hundreds of thousands are seeking refuge, asylum, work and a better life while risking oppression and even their lives to come to Europe. 

Much has been written on this subject – including this insightful analysis by Dr. Vincent Durac.  I don’t intend to survey all the issues or appropriate responses as this crisis has many origins and dynamics and will require substantial doses of enlightened national policy combined with international cooperation.  But here are a couple of thoughts.

First, the men, women and children that make up Cameron’s swarm – they are not a problem, they are a solution.  They are a solution to Europe’s ageing demographic, skill base and employment crisis.

A key part of this is the fact that Europe is growing old.  Using the EU’s main scenario demographic projection, we see that the EU’s total population will rise by 17 million while the number of over 65s will rise by 54 million.  Working age population will fall by 34 million.  12 of the 28 EU countries are actually projected to experience an overall fall in their populations.  With a higher proportion of elderly and a falling number of working age men and women, Europe is set to suffer a slow age crash.

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Who Was Right? The Magic Trick of Austerity

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The Irish economy has finally recovered 8 years after the slump began. This is the longest depression in the history of the State.  Since its inception the economy has grown at around 3% a year. So the lost output over 8 years means that the economy is now about 25% below its trend growth rate.

Supporters of austerity will claim that growth is a result of austerity. But this is a conjurer’s trick, asking us to suspend disbelief. The reality is very different. The Irish economy experienced a change of policy and a change of circumstances. It was these that produced recovery. Everything else is sleight of hand.

When Fine Gael/Labour came to office they implemented their own version of austerity. The response of the economy predictably was to re-enter recession from mid-2012 onwards for 4 quarters, creating the rare phenomenon of a double-dip recession. This is shown in Fig. 1 below. Recovery only happened later.

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Fig.1 Real GDP

The policy response was marked, if little publicised. From the end of 2012 onwards there were no new net austerity measures. Instead government spending was actually increased. This was a turn towards stimulus spending, not austerity and is shown in Fig.2 below.

It is not possible to claim that austerity led to recovery. Government spending was increased after the end of 2012 and recovery began 6 months later.

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Fig.2 Real Government Spending

The change of circumstances was even more dramatic and had a bigger overall effect on growth.  Since early 2014 the Euro has fallen by 25% against the US Dollar, providing a boost to exporters across the Eurozone and especially to very open economies like Ireland. Many other currencies are linked to the US Dollar in one form or another, notably the Chinese Renminbi. Together, these two economies alone account for 30% of all EU trade.

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Housing Policy is More Than Pulling Levers

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This article originally appeared on Eoin O’Mahony’s blog 53 Degrees on the 17th of August

In the new online newspaper, Dublin Inquirer, Lorcan Sirr stated that the most serious problem ”with housing in Dublin…is this:  at the state level, housing policy is dominated by an inappropriate and politically motivated rural ideology…” This ideology is made manifest by a constant drive for home ownership.  This leads to discrimination against urban housing and elected politicians who are concerned only with ”road frontage  and planning permissions.” I understand that Lorcan’s article was a version of a talk he gave at the MacGill Summer School in late July. But there are a number of problems with his argument as presented, the biggest one of these being that you cannot talk about housing in Ireland unless you talk about social class.

Houses  and flats are built, rented and bought.  People live in housing of all sorts and sizes and communities develop around these forms of housing. We find things in common with people around us and we build and sustain communities. These are productive relations  and housing is one outcome of these relations.  In this way, housing is not simply a matter of sufficient  units being built but decisions taken about how we should live.  It is a matter of politics, not technical capacity.  Lorcan’s argument about a rural ideology owes more to the second than the first.  Recent research  has pointed significant changes to housing over the years. In a report for hardly radicalised Jesuit  Centre for Faith and Justice  (JCFJ) earlier this year, the authors wrote that:

The  prolonged  period  of growth in the owner-occupier  sector reflected State-driven tenure strategies [since the mid-1940s], employing a range of direct and indirect incentives.

In other words, there is nothing natural or essential about an increase, post-1940s, in the proportion of the population living in owner-occupied  tenure. It is a matter of policy, an effort by strategy and tactics reflecting particular relations within a class, to achieve particular ends.  As the authors of the JCFJ demonstrate, owner-occupation is actually in decline since the early 1990s. The NESC has written recently on social class and tenure in Irish housing. They have noted a trend amongst different social groups:

Mortgage-holding is declining most among young people in the un- skilled, semi-skilled and skilled manual classes, particularly the former.

… [And] with the sharp decline in local-authority housing construction and other supports for low-income buyers from the mid-1980s, this option is no longer available for many younger people in socio-economic groups with lower incomes.

Sirr states that ”housing [policy] is regarded as being about three things only: planning, selling price and construction cost.” He is correct to point out that professions like planners have an overweening influence on housing in Ireland but local authority housing sections are not ”endured” by their staff. The electoral cycle is also a powerful influence on decision making. Local authorities are constrained by decisions by the last few governments, and particularly the current one, that are determined to starve social housing of funding. The last time the Irish government completed over 1,000 local authority houses was in 2010.  In the four year period since (for which data is available) about 1,300 local authority houses have been completed (source: CSO). In contrast,  during the same time period, over 35,000 units of private housing have been completed.

What this research and much more show is that these are the results of choices and political ones at that.  When  sufficient political pressure is brought to bear, much like the water tax struggle since 2013, things get changed.  It is not a matter of personnel and the over-familiarity among housing associations and local councils. Levers don’t get wearily pulled out of habit; political choices are argued for and, at times, forced. An argument that relies on an abstract sense of housing form, for ex- ample one-off housing, and the capacity of people to reproduce living conditions are both problems. We only have to drive through Leitrim, Longford and Roscommon to notice the longer-term effects of trying to cluster houses at the edge of villages ill-suited to suburban  housing forms.  These  are, however, the results of political decisions, not individual choice. It seems to me that Sirr’s argument relies on blam- ing ordinary people for putting themselves in poorly-planned housing. Decisions on housing are made on many scales.

I agree with him when he argues we need better data but a housing policy must serve people first, not a technocratic process of ’build and they will be housed’.  There is no sense that this ’rural ideology’ can be seen in material terms other than its rep- etition for want of an alternative just appearing.   I argue therefore that we need to understand social class when housing is considered,  particularly from a formal policy point of view. The use of adequate data is a necessary step. So too is avoid- ing unhelpful categories like rural and urban or more importantly between renters and owner-occupiers.  Housing in Ireland, particularly right now, is a more dynamic process of class relations than is evident from Sirr’s analysis.

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