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The People’s News No. 121 Out Now!

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P1. Juncker: The EU needs an army. The European Union needs its own army “to face up to Russia“, as well as to restore the bloc’s standing around the world, according to EU Commission President Jean-Claude Juncker.

P2. Is “Another Europe” Possible? There are over 100,000 EU rules, international agreements and legal acts binding on or affecting Irish and other citizens across the EU.

P3. Save the Date:  Friday, 27 March 2015: Protest – Scrap TTIP! 10.00 – 11.00.  Venue:  Dublin Castle, (Dame St Entrance). EU Trade Commissioner, Cecilia Malmström, will be in town.

P4. A Dilemma for 2016? Dominic Hannigan, Labour TD, the chairman of the Oireachtas Joint Committee on European Union Affairs seems to believe that were Britain the leave the EU many of the financial institutions currently based in London would move to Dublin!

P4. An obstacle to real and sustained growth: Despite a fairly shameless campaign to persuade us that the worst is behind us most people are aware of the fact that we are still burdened with huge government, corporate and private debts.

 

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Economic Fundamentals and a Unified Irish Economy

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This article is based on a background paper which was delivered to a fringe meeting at the recent Sinn Féin Ard Fheis

In Ireland there are two separate economic entities. Their separation means they run up against the fundamental laws of economics, as first identified by Adam Smith[i]

In the first instance it is the size of the home market which determines the scope of the division of labour. But in Ireland both economies, by their separation, have a truncated home market. This was not always the case. As part of the British Empire the North East portion of the island was highly integrated into what was then the largest ‘home’ market in human history. At the same time most of the rest of the island was primarily a breeding ground for cattle, to help feed the large metropolitan imperial centres.

Post-Partition the situation has dramatically changed.  The Empire is gone while the southern economy has both developed a home market of a certain size while integrating itself to one of the world’s largest markets in the EU. This is the key fundamental fact which explains the dramatic changes in average living standards in the two parts of the Ireland since Partition. 

This is illustrated in Fig.1 below, which shows per capita GDP using common international Dollars (adjusted for Purchasing Power Parities, first Angus Maddison and then OECD). It amounts to a startling transformation of relative prosperity within Ireland.

To specify the data, Maddison shows that per capita GDP in Ireland in 1921 was $2,533 and that in Britain it was $4,439 (and from a variety of sources that average incomes in the north-east counties of Ireland was at least on a par with Britain). From OECD data per capita GDP in RoI was $37,581 in 2013 and in the UK it was 34,755 (and the ONS data shows NI per capita output was 82% of the UK level).

 fig1_mb

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Starving Ourselves: Ireland’s Low-Spend Economy

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When we look at the headline numbers, it appears that Ireland is a low-spend economy – that is, Government spending is well below EU averages.  This helps explain why we don’t have anything near the public services, income supports and investment that other EU countries enjoy.  However, it is claimed that a significant part of the extra spend in other EU countries is due to their older demographic which necessitates higher public resources (pensions, healthcare, etc.).  Strip this away, and we may find that Ireland is actually a high spending country.

Seamus Coffey has contributed to the debate by doing just that – stripping out spending on the elderly.  When this is done Ireland comes in, not near the bottom, but near the top:  the 5th highest public spending economy in the EU-15, even ahead of ‘high-spend, high-tax’ Sweden.

This is a politically loaded argument.  If it can be established that we are, in fact, a high spending country this would justify a tax-cutting agenda.   We have the money, so the argument would go, we just don’t spend it right.

So are we an average or even high spending economy by EU standards?  No.  Not even close.  In fact we are starving ourselves of public resources.  Let’s go through this argument because I’m sure we’ll hear more of this as the campaign to cut taxes continues.

Headline Figures

First, with the help of the EU Ameco database, let’s look at primary expenditure (public spending excluding interest payments) with an adjustment for GDP per the Irish Fiscal Advisory Council (which has created a hybrid measurement between GDP and GNP).  2012 is the last year we have data for old age expenditure – and as we will see below, it is highly misleading to make any conclusions about spending levels for this year.

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Progressive Film Club & Ireland-Palestine Solidarity Campaign

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A reminder of our screening this Saturday, in conjunction with the Ireland-Palestine Solidarity Campaign, which features the multi-award winning “A World not Ours”.

We will be having two screenings this month. Details of our show on the will be sent next week.

2.30pm: The Great Book Robbery (2012)

Telling the story of the systematic looting in 1948 of 30,000 Palestinian books in a joint operation by the nascent Israeli army and the Israeli national library. A remarkable illustration of how one culture emerges from the dust of another after it has laid it to waste; the moment Palestinian culture is destroyed is also the moment a new Israeli consciousness is born, based not only on the erasure of the Arabs’ presence in Palestine but also on the destruction of their culture.

¦ Directed by Benny Brunner.
¦ In English & Hebrew, with English subtitles.

**3.45pm: A World Not Ours (2012)

An intimate, humorous, portrait of three generations of exile in the Palestinian refugee camp of Ain el-Helweh, in Lebanon. Personal recordings, family archives, and historical footage ensure the film is a sensitive and illuminating study of belonging, friendship, and family. Filmed over more than 20 years by multiple generations of one family, is more than just a family portrait; it is an attempt to record what is being forgotten, and mark what should not be erased from collective memory.

“Flips storytelling and Mideast-Arab cliches on their heads … The Wonder Years in a refugee camp” – Variety

¦ Directed by Mahdi Fleifel.
¦ In Arabic, with English subtitles.

**A note of thanks to the directors

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Syriza’s Only Choice: A Radical Step Forward

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An article by Spyros Lapatsioras,[1] John Milios[2] and Dimitris P. Sotiropoulos[3]

 “One must know how to employ the kairos of one’s forces at the right moment. It is easy to only lose a little, if one always keeps foremost in the mind the idea that unity is never the trick, but the game.” [4]

1. Introduction

The transitional “bridge Agreement” of the 20th of February is a truce intended by the Greek government and welcomed by the other side (the European “institutions”). Within the truce period (the next four months), the conditions for negotiating the next agreement will be shaped. This could mean that everything is still open. However, that is not true for two reasons. First, the very transitional agreement changes the balance of power. Second, the “hostilities” will continue in the course of the next four months (i.e. the review of the commitments and the re-interpretation of the terms by each party).

2. The agreement of the 20th February: A first step on slippery ground… 

2.1 Negotiation targets

In the first substantive phase of negotiations at the Eurogroup of the 12th February, the Greek government sought an agreement on a new “bridge program” stating that it would be impossible to extend the existing program on the grounds that it has been rejected by the Greek people:

  1. The “bridge program” would not involve conditions, reviews and so on, but should be an official manifestation of the willingness of all parties to negotiate without pressure and blackmail and without any unilateral action.
  2. In the above context, Greece would forgo the remaining installments of the previous program, with the exception of the return of the 1.9 billion euros that the ECB and the rest of Eurozone’s national central banks gained from the holding Greek bonds (programs SMP and ANFA). Greek authorities could issue treasury bills beyond the limit of 15 billion euros to cover any liquidity emergencies.
  3. At the end of this transitional period: (a) Greece would submit its final proposals, which according to the program of the government would include a new fiscal framework for the next 3-4 years and a new national plan for reforms; (b) the issue of a sovereign debt restructuring-reduction would come to the negotiating table.

The German government and the “institutions” (EU, ECB, IMF) came to the negotiations with the position that Greece had to request a six-month “technical extension” of the existing program – renamed as the “existing arrangement” – to enable its successful completion. 

2.2 The outcome of the negotiation

The agreement of the 20th of February includes a four-month extension of the “Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments.” The extension of the Agreement (“which is underpinned by a set of commitments”) means: (a) evaluations by the three “institutions,” (b) commitments and conditions, (c) scheduled installments as they appear in the previous Program, subject to a positive evaluation, (d) return of the profits from holding Greek bonds by the ECB and national CBs, but subject to a positive evaluation by the “institutions” (even given the “independence” of the ECB).

In short there is a rejection-withdrawal of the Greek government’s negotiation targets (1) and (2). In addition, there is no explicit reference to how the government will cover its short term financing needs (e.g. issuing treasury bills to cover bond redemptions, interest payments and other possible emergencies) until the completion of the assessment. In this regard, the reference to the independence of the ECB may imply its “discretion” in assessing the extent to which the Greek government responds positively to the “commitments” that accompany the extension of the agreement (something which undoubtedly will complicate any “interpretative” attempts in relation to the agreement on the part of Greek government).

At the same time, the February 20 Agreement includes the statement: “The Greek authorities have also committed to ensure the appropriate primary fiscal surpluses or financing proceeds required to guarantee debt sustainability in line with the November 2012 Eurogroup statement.” This means that the Greek government refrains from the target of debt restructuring-reduction and adopts the sustainability plan based on debt repayment mostly through primary surpluses. This implies the rollback from point (3b) of its initial negotiating package.

What the Greek government has won (aside from the mere change in terminology, about which there was intense debate) is:

  • A. Part (a) of section (3) of its initial suggestions, namely the right to propose reforms to the “institutions” for approval with regard to fiscal consolidation and growth. The policy measures agreed by the previous government (reduction of pensions and increase of VAT in the islands) were thus taken out. Both sides agreed to give particular emphasis to the “overdue” fight against corruption and tax evasion, public sector efficiency, improving the tax system, etc.[5]
  • B. Further negotiations on the size of the primary surplus for 2015. Instead of the previously agreed 3% of GDP, the new agreement leaves open the issue of a lower primary surplus for 2015: “The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.”

It is clear that the new agreement is a truce, but truce is by no means a tie. The agreement is a first step on slippery ground. The Greek government may have gained time, but the political landscape seems quite tough, having minor similarities with the initial minimum negotiation targets set by the Greek side on the 12th February.

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New Land League press conference yesterday. Photo courtesy of the Irish Times

Those Were the Days, Wha? Jerry Beades’ Old Ways Given a New [Land League] Gloss

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I would like to point out that one does not need a long memory to recall when Mr De Rossa and Mr Rabbitte were constantly using the media to get their socialist message across to the masses.

Jerry Beades 1996

Like a lot of people, I try and avoid reading media stories that have all the hallmarks of absurdity. As these stories grow, boosted by some invisible force they annoy me more because they prove difficult to ignore. You find that you have the gist of what is going on without even trying. Work colleagues discuss them in your presence, people waiting in supermarket queues rattle through the reported facts, and even sometimes, curiosity gets the better of you and in a bored moment you click a link to a seductive news headline and scan the article’s salacious content.

Then the deed is done. You’ve gone deeper than you ever indended. The mind recoils at the avoidance of facts contained in it and the framing of the story to justify the attention given to something that deserves none.

The example I am talking about is this Irish Times story about the ‘repossession‘ and Jerry Beades role in it.

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Greece – The Rocky Road Ahead

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It’s been a week now since the guns fell silent between Greece and its creditors and a 4 month armistice was agreed – so what are we to make of the outcome? Yes it’s true that Tsipiris, Varoufakis and Co. were not able to deliver on one of their two main election pillars – debt forgiveness – but does that necessarily make it the complete capitulation that some have said? Would an honourable defeat be a more accurate appraisal? Or could it be that the agreement was simply a crucial exercise in buying time and space?

These are certainly valid questions but unfortunately valid questions don’t always elicit easy answers. For the position we take on this temporary agreement is in many ways determined by how we viewed the bargaining power of Syriza relative to the European establishment from the outset. In other words; hows we perceived that power differential helps determine what range of outcomes we would have considered possible.

So for example if you thought that in the negotiations Syriza held the trump card and all that was required was calling the Eurogroup’s bluff and threatening the nuclear option (Grexit) then you would see the agreement as a relative failure largely attributable to a leadership that lost its nerve. Thus all that was required was different players made of tougher stuff.

If on the other hand you believed that Syriza was negotiating from a much weaker position given that they were seemingly less prepared (and more scared) of Grexit than their interlocutors, then you could rationalise the agreement as best that could have been bargained for whilst providing the necessary breathing room to prepare a potential Grexit strategy.

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The Money Exists for Investment in Greece

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This article originally appeared in Socialist Economic Bulletin on Friday, the 27th of February

The fraught negotiations between the new Greek government and representatives of the EU institutions are likely to be prolonged. They have centred to date on Syriza’s efforts to find room to alleviate some of the worst effects of austerity and address what is called the ‘humanitarian crisis’.

This is entirely justifiable given the depth of the fall in living standards with widespread malnutrition in Greece, a health crisis, hundreds of thousands of homes cut off from electricity supply and other ills.

Policies aimed at income redistribution can help in this key area, so it is entirely correct to attempt to increase tax revenue from the rich in order to ameliorate the effects of poverty on the poor. But any sustainable improvement in living standards must be based on increasing the productive capacity of the economy which requires investment. Any transfer of income will be a one-off effect if income does not grow. Yet the austerity measures imposed by the Troika (EU Commission, European Central Bank and IMF) and the existing burden of debt interest payments prevent the government from investing and provide a further disincentive for the private sector to invest of its own volition.

Domestic sources of investment

There are two key sources of funds that could be tapped for investment; domestic and international.

Domestically the Greek business class claims the highest share of national income in the whole of the OECD. In 2013 (in nominal terms) the Gross Operating Surplus of Greek firms was €102.2bn from a GDP total of €182.4bn. This profit share in GDP of 56% is way in excess of the customary levels in the OECD. By comparison the German profit share in the same year was 39.3%.

A high profit share is not itself directly harmful to growth and prosperity. If firms were investing profits the productive capacity would be rising rapidly and new high-quality and high-paid jobs could easily be created. But the opposite is the case in Greece, which also has the lowest rate of investment as a proportion of GDP in the whole of the OECD. Again in nominal terms investment (Gross Fixed Capital Formation) in Greece in 2013 was just €20.5bn or 11.3% of GDP. By comparison the German proportion of investment was 19.8%.

This is not to hold up the German economic model to be emulated. Like all the Western economies (including Britain) the rate of investment in the German economy has slowed dramatically over several decades, which is the cause of the ‘secular stagnation’ of the Western economies over the same period.

Even so, the disparity in the profit rate and the investment rate is exceptional in Greece. The proportion of uninvested profits in Germany is equivalent to 19.5% of GDP (profits equal to 39.3% of GDP minus an investment level equivalent to 19.8%). This level of uninvested profits is very high by historical standards. But the proportion of uninvested profits in Greece is 44.7% (profits of 56% of GDP minus investment of 11.3%). The nominal level of profits and investment is shown in Fig. 1 below.

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Euro Finance Ministers Michael Noonan and Yanis Varoufakis

Government Misleading Europe about Austerity and Ireland’s Debt Crisis

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The government is misleading Europe about the reality of austerity and the debt crisis in Ireland so as to avoid admitting that they took the wrong approach with austerity and their failure to get a meaningful debt deal. The truth is austerity is based on flawed economics and it hasn’t worked in either Ireland, Greece or for Europe and Ireland’s debt is unsustainable.

Austerity has devastated Irish society. For most people recovery is just a word being spoken by politicians and the media. The Central Bank and ESRI have highlighted that the much lauded growth figures do not reflect the true health of the Irish domestic economy because they are artificially inflated by multinational and financial activities that do not take place here.

Austerity has resulted in 1.4 million people, almost 31% of the population, suffering from deprivation – which is up from 14% in 2008 and 37% of children suffer deprivation (up from 18% in 2008). The legacy crises are multiple – from mortgage arrears, rent, homelessness, childcare, hospitals, and community services. Unemployment figures are largely reduced because of emigration and the use of unpaid jobs schemes. Domestic demand remains static and working class communities, small towns and rural areas are devastated. Austerity has not worked for the low income and working people of Ireland. At a European level the Euro area is mired in stagnant growth of 0.8%, mass unemployment of 11%, and a debt-to GDP ratio that that has risen from 72% in 2009 to 92% today.

The calculations of economists Reinhart and Rogoff that austerity was required to reduce government debt levels below 90% in order to return to growth was also found to be incorrect. The IMF has also admitted that it underestimated the negative impact of austerity’s higher taxes and spending cuts on economic growth and unemployment.

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Issue PN 120 of the People’s News Out Now

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Issue PN 120 of the People’s News Out Now (PDF)

Page1. Report reveals escalating poverty across EU – the mirage of Social Europe Caritas Europa, has just published a report: Poverty and Inequalities on the Rise –Just social systems needed as the solution!

P1. Ukraine, the EU and Russia

P3. The poor Germans! An unbelievable total of twelve million people in Germany are classed as poor, according to a study by a German welfare association.

P4. Greece baiting seems to have become the favorite sport of the political and media elite

P6. TTIP points to the demise of the public health service. A key part of the TTIP is ‘harmonisation’ between EU and US regulation, especially for regulation in the process of being formulated.

P8. Government prepared for the collapse of euro zone

P8. A lackluster defence of public services

P9. Plain packaging. There’s a big difference between the threatened tobacco plain packaging legal case and what a similar case might look like under TTIP!

P10. Another EU con job

P12. Giscard: ‘Greece should leave the euro.’ Valéry Giscard d’Estaing, author of the EU Constitution/Lisbon Treaty, has said that abandoning the single currency would be the best way for Greece to solve its debt crisis.

P12. Ireland continues to suffer from Common Fisheries Policy

P13. TTIP; education and for-profit colleges. Proposals to make education a ‘traded’ commodity could cost the Irish taxpayer millions, by allowing investors in ‘for-profit’ colleges to sue the government for loss of profit as a result of state investment in public education.

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International Women’s Day Celebration

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Satharn 7 Márta, 2 i.n.

Ceiliúradh Lá Idirnáisiúnta na mBan

Women in the water resistance

Cainteoirí: Ann Farrelly (Sord), Cat Inglis (Baile Átha Cliath Thoir Thuaidh), Jessica Hughes (Fionnghlas), Carole Watson Purcell (Tamhlacht). Cathaoirleach: Betty Purcell.

? Teach Shéamais Uí Chonaíle (43 Sráid Essex Thoir)

 

Saturday 7 March, 2 p.m.

International Women’s Day celebration

Women in the water resistance

Speakers: Ann Farrelly (Swords), Cat Inglis (Dublin North-East), Jessica Hughes (Finglas), Carole Watson Purcell (Tallaght). Chairperson: Betty Purcell.

? James Connolly House (43 East Essex Street)

 

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A Mediated distribution of
the real and the fictional

What’s in a Photograph?

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Wikipedia scores zilch when it comes to introducing the term fine art photography:

Fine art photography is photography created in accordance with the vision of the artist as photographer. Fine art photography stands in contrast to representational photography, such as photojournalism, which provides a documentary visual account of specific subjects and events, literally re-presenting objective reality rather than the subjective intent of the photographer; and commercial photography, the primary focus of which is to advertise products or services.

This begins by implying that non-fine art photography cannot the act of a creative photographer or —  another possibility given the partisan logic of the premise  —  all photography created by an artist belongs to the fine art stable. The error is then compounded by a categorical contrast between the esteemed subject of fine art photography and two other types of photography: the representational sort, such as photojournalism, and the commercial kind. We can take the hint and regard these last two as inferior: one is merely a visual record of what exists and the other merely vulgar advertising.

Two books published by Hatje Cantz embody what is really at stake here. World Wide Order is a collection of photographs by Julian Röder, divided thematically but united by a concern with the incestuous union of power and economics that we know as capitalism. The first section is entitled The Summits, a series that started when Röder was a participant in the protests at Genoa in 2001 and which evolved as he recorded moments from the opposition to the G8 summits in Brussels, Evian, Gleneagles, Heiligendamn, Thessaloniki and Hokkaido. Impressive as the 2003 anti-war protests were, bringing millions of civilians onto the streets around the world, they were essentially passive and cannot be compared with the spirit of protesters that Röder captures with his camera. He records civil disobedience as it should be — organized, focused, prepared to defend itself, courageous – epitomised by a shot taken at Gleneagles in 2005 that calls to mind an infamous  moment photographed during the Battle of Orgreave. As the G8 organizers retreated to rural locations in order to outwit opposition, conflict moved from urban barricades to country lanes and fields. Gentrify this if you can.

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Grexit or Compromise: Which Way for the Greek Left?

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The last 10 days, from February 11th to February 20th, saw some critical developments in Greece. After a number of clashes in the Eurogroups of 11th, 16th and 20th February, an agreement was reached extending the “current arrangement” with the Troika for 4 months. This agreement, as is generally agreed, was a heavy compromise on the part of the Greek SYRIZA-ANEL government, putting into doubt the possibility to carry out its program, i.e. SYRIZA’s Thessaloniki program. There was another serious compromise too, when, on February 18th, Prokopis Pavlopoulos, a representative of the conservative camp and leading figure of the ND party, was elected President of the Republic.

The same period witnessed, on the other hand, some big demonstrations in Greece and other European countries too, centered round the task of cancelling debt. Although not as massive as those in the 2011-2012 period, they show some real hope of a new rise of the movements and their possible intervention in the scene. Significantly, these demonstrations, which begun as acts of spontaneous support to the Greek government, seem likely to continue after the compromise made – a new one was announced for February 26th in various facebook pages.

Taken together these developments pose some serious questions. Does SYRIZA relinquish its promises of a substantial change with regard to the previous austerity ND-PASOK regime? Is such a change feasible within the EU through an acceptable compromise reached after a negotiation? Or is it impossible and Greece should head instead for a payment default and exit the EU – the prospect broadly known as “Grexit?”

In this article we will discuss these questions, with an eye to the coming solution of the Greek drama when the four month prolongation of the Memorandum ends.

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