Recent Posts

ula

Time for the Left to Act Together

, , 6 Comments

Popular desire for political change has become a feature of the current campaign against the water charge. This charge is the last straw in a litany of bank-bailout  impositions; and many want an entirely different set of socio-political priorities. Recent months have also shown the power of the mass movement to bring change. The movement now needs to drive home the advantage by making the charge unworkable through mass non-payment and continued mobilization. But this in itself is not enough to create the radical political alternative that would implement the significant change that many in the campaign, and across society, desire.

Such change would require a new left party – committed to a socialist alternative. The imperative for socialism has never been greater given the disastrous impact of the financial crash on working people and impending environmental meltdown due to the failure of the market system to curb fossil fuelled growth.

Is a new left party on the political horizon at present? Clearly not. The closest recent approximation to the start of such a party was the United Left Alliance. While we acknowledge its failure, we think there are some lessons from the ULA experience that can help us today.

At the time when ULA TDs were elected there was little mass challenge to the government: dissatisfaction was expressed through the election and there was no mass movement behind the new political formation. So there was no big growth in the ULA.

But other factors also influenced the difficulties in the ULA. There was insufficient trust between the leaderships of the two main political groups; there was unease at working together in a common organization, while having differences. There was also a failure to prioritise the ULA and build it as a functioning organisation.

But the political conditions for such a formation have changed for the better: there now exists a powerful mass movement against the water charge and other austerity measures – albeit quite fragmented. It has created the conditions for a political alternative to the Troika parties and to Sinn Fein, which is prepared to go into coalition with the Troika parties – with the inevitable political accommodations that preserve inequality such as we have seen Labour and the Greens implement.

Based on the experience of the ULA, we think that any new left formation cannot be based solely on an amalgamation of the current small parties but would have to draw in activists who have mobilised in recent months and who want real change. Relations between these parties are not great at present: witness the electoral competition in the European elections and Dublin South West. But a commitment to develop common work against the water charges and a common electoral project involving many new activists could generate positive working relations and create the momentum and trust required for the construction of a new, anti-austerity political formation after the election.

Read Post →

elderly

The New Fiscal Enemy Within: The Elderly

, , Comment Closed

“Old people don’t need companionship. They need to be isolated and studied so that it can be determined what nutrients they have that might be extracted for our personal use.”

- Homer Simpson

The Irish Times published the highlights of a paper produced by the Department of Public Expenditure and Reform (DEPR) purporting to show the latest crisis awaiting us – the crisis of unsustainable public pensions.  DEPR produced some numbers:

  • The number of people aged 65 and over is projected to increase from 570,000 in 2013 to 855,000 in 2026.
  • Spending on the contributory and non-contributory State pension schemes already account for €4.93 billion, or 25 per cent, of the total cost of social protection services.
  • The State could have to provide annual increases in funding of nearly €200 million up to 2026 just to keep pace with the growing elderly demographic.  This means a 50 percent increase in spending on state pensions by 2026

These look like truly scarifying numbers – 50 percent increase in the number of pensioners and 50 percent increase in pension costs.   No wonder the newspaper headline read:

‘Cuts to state pensions “must be considered”

What can we do, short of setting up a kind of Hunger Game for the elderly?  Thankfully, DEPR has some ideas:

  • Cut the weekly pension by €8.50 per week
  • Scrap the €10 weekly top-up for people over the age of 80
  • Bring forward the scheduled dates for raising State pension eligibility
  • Abolish the free TV licence.
  • Means test fuel allowance for new recipients of the Department of Social Protection’s household package of benefits.
  • Abolish free travel passes for spouses and companions of the elderly

Or we could take another route:  increase PRSI contributions and/or cut back on expenditure in other areas (health, education, etc.).  Thankfully, DEPR is on top of things, laying out the painful but necessary reforms (i.e. cuts) necessary to sustain our public pension system.

What does all this add up to?  Rubbish.

Read Post →

paristhumb

Discussing Charlie Hebdo

, , Comment Closed

It is possible to mourn human loss without embracing everything those humans did.

It is possible to mourn human loss while being openly disturbed that certain deaths are never mourned, and the reasons for that.

It should be possible to discuss the political consequences of an act without having to dissociate that discussion from the politics of the act itself.

It is possible to speculate as to motivation, causality, experience, relations and histories without condoning, or being accused of condoning, an act.

It is possible to defend a right and also to enact it in criticizing the way in which that right is enacted, and reductively understood.

It is possible to oppose an assault on free speech, while also insisting on the hypocrisies, inequalities and elisions that undermine the idea that free speech is a cornerstone of ‘the West’.

It is possible to value politically the freedoms you have without understanding them as deriving from exclusively Western ideals, or as evidence of civilizational superiority.

It is possible to understand the political value of ‘the right to offend’, while opposing the political deadness of the contemporary duty to offend.

It is possible to defend a universal right to free expression, while noting the strange contemporary relativism that has little interest in the content, context and consequences of what is expressed.

It is possible to recognize the intentionality of an expression without accepting that this defines its meaning or significance.

It is possible to insist on the importance of context without assuming that there is but one context.

It should be possible to recognize the importance of context without writing dissenting voices and evident antagonisms out of that context.

It is possible to oppose oppressive institutional and political uses of religion while not contributing to the ways in which presumptive religious identities are racialized.

It is possible to be critical of positions derived from faith while not succumbing to the kind of identity politics that depends on treating faith as a failure of the mind.

It is possible to grasp that the lack of secularism, in one context, underpins oppression, and that a surplus of secularism, in another, extends it.

It is possible to approach racism as a political effect and not as an individual moral failing.

It is possible to critique racism without the reductive certainty of categorising racists and antiracists.

It is possible to understand that political actors can act against particular forms of racism while simultaneously extending others.

It is possible to affirm that ‘Islam is not a race’, while still contributing to anti-Muslim racism.

It is possible to hold onto the diversity of Muslim populations while recognizing the ways they are collectively racialized as Muslims.

It is possible to grasp that effects matter more than intentions, and thus that what is presented as antiracist may be received as having racializing consequences.

It is possible to wear your values on your sleeve, if you wish, and still reject monocausal explanations.

It is possible to advance a grinding form of communitarianism while criticizing the appeal to community.

It is possible to insist on the living legacies of colonialism and the hierarchies of the racist state, while recognizing that this does not determine the political agency of  ‘extremists’.

It is possible to oppose both antisemitism and anti-Muslim racism, and not to present them relationally as a zero-sum game.

Read Post →

St

Syriza Comes to Ireland’s (and the Eurozone’s) Rescue

, , 2 Comments

Everyone in Ireland, regardless of their political orientation or party-political affiliation, should be hoping Syriza wins the upcoming Greek election and forms the next government. Why?  Because their proposals on public debt would be a major boost to Ireland and the Eurozone as a whole.   The headline to Denis Staunton’s excellent article said it best:

‘Why Ireland should support Greek plan to write down euro-zone public debt’

Leave aside your ideological predispositions.  Even Wolfgang Munchau of the Financial Times believes Syriza and Spain’s Podemos are the only parties talking sense about European debt.

Syriza is proposing a European Debt Conference – similar to the one held for Germany after World War II.  And the broad proposals they will bring to the Conference are based on this this paper written by Dimitris P. Sotiropoulos, Yiannis Milios and Spyros Lapatsiora.  In short:

  • The European Central Bank (ECB) acquires a significant part of the outstanding sovereign debt of the Eurozone countries – reducing national debt levels to 50 percent of GDP.
  • These bonds would be converted to zero coupon bonds with a 1 percent discount
  • The countries will buy back the debt when the ratio of those bonds falls to 20 percent of GDP

The impact for Ireland would be dramatic.  In one fell swoop our public debt would be more than halved – reduced from 108 percent of GDP to 50 percent.  This would cut interest payments by approximately half, saving €3.7 billion.  Imagine what we could do with that €3.7 billion every year – increase investment, improve public services, and boost social protection income (even cut taxes if that is your political perspective).  Whatever, this money would constitute a major stimulus programme for Ireland.

It would have a similar effect throughout the Eurozone.  All countries would benefit (with the exception of Estonia, Latvia and Luxembourg; their debt is already below 50 percent).  Over €4 trillion of Eurozone debt would be removed.  With the massive interest payment reductions, the Eurozone would receive a similar stimulus boost.  This would be the best way to escape the looming deflationary crisis.

The authors also hold out the prospect of a further boost, by presenting a slightly different alternative scenario to the one above:  interest payments would be suspended over the first five years and rolled up into the zero coupon bonds. Giving Ireland and the Eurozone a free pass on interest payments over the next five years would have an even more stimulatory and economically-galvanising effect.

Read Post →

makingendsmeet

The Era of Making Ends Meet

, , Comment Closed

2015 will be all about making ends meet; or rather, not making ends meet.  Gone are the drama days of the last few years – NAMA, bondholder debt, collapsing employment and output, bailouts and Troikas (unless the EU decision-makers are determined to accelerate the European deflationary spiral; then we could have drama aplenty).  It’s not that these issues have gone away – but they are now embedded, hidden, in what can be called a ‘new normal’.  And this means we are entering into an excruciating and potentially protracted period of grinding things out; day by day.

So many commentators talk about the economy in recovery but ‘people not feeling it yet’.  I suggest there is a better way of looking at it.  The boulder has fallen down the hill – that’s what the gravity of recession will do; that, and austerity pushing it down faster.  Now people are pushing the boulder back uphill – it’s a big boulder and it’s a big hill.  And people are supposed to be ‘feeling it’?  They are supposed to be grateful?  Hmm.

We have discussed other indicators – deprivation, food poverty.  These are harsh benchmarks that affect a significant proportion of the population.  But there is another indicator, referred to as ‘soft’, which gives a more representative picture of this phase we are entering:  making ends meet.  It is called soft because it is not calculated on the basis of percentages of the median wage (relative poverty) or even a survey of people’s concrete experience (deprivation indicators).  It is based on asking people ‘are you having difficulty making ends meet’ – a highly subjective question that doesn’t define ‘difficulty’ or ‘ends’.  It is left to people to determine that.

The EU asks such a question in the annual Survey of Income Living Conditions.  They break it down by degrees:

  • Households making ends meet with great difficulty
  • Households making ends meet with difficulty
  • Households making ends meet with some difficulty

This is the result:

Making Ends Meet 1

Read Post →

laugh

From Alpha to Omega Podcast: #058 Radical Laughs

, , Comment Closed

This week I am delighted to welcome Sean Michael Wilson to the show. Sean Michael Wilson is Scottish comic book writer, who now lives and works in Japan. In the last couple of years, Sean Michael has released a couple of explicitly political graphic novels:

‘Parecomic: The Story of Michael Albert and Participatory Economics’

‘Fight the Power! A Visual History of Protests Among the English Speaking Peoples’

He has also recently wrote a post for the Forbidden Planet Blog on how an anarchy-based economic system would benefit the creation of comics, and all art in general. We discuss the creative process of the comic-book writer, the emergence of the adult comic-book genre, the Walking Dead and it’s Hobbesian view of the world, why Hollywood does not do anarchy, progressive politics in comics, socialism and the world of art, and the need for revolutionary jokes.

You may also be interested in a promising new podcast that has just been launched by Amogh Sadu and C. Derrick Varn called ‘Symptomatic Redness’. It features a really good interview Amogh did with me earlier in the autumn, where I give my opinions on all things economic and political, and slander all my previous guests. You can listen to the interview here.

Here is where you can get your hands on Sean Michael’s Work:

Here is Sean Michael’s blog:

You can find Sean Michael’s Forbidden Planet blog post here.

The music on this show was:

‘The Order of the Pharaonic Jesters’ by Sun Ra and his Arkestra
‘Turning Japanese’ by the Vapors
‘wrapping the green flag around’ by The Dubliners
‘Such A Waste Of Mind’ by Faron Young
‘Bring Me Sunshine’ by Morecambe and Wise

You can find the Sligo Anarchist here.

Read Post →

remb_t2

Rembrandt: Facing the Truth

, , 3 Comments

Visual Art Review: 

Rembrandt The Late Works (The National Gallery, London)

Rembrandt: The Late Works, Jonathan Bikker et al (Yale University Press)

Rembrandt’s Universe, Gary Schwartz (Thames & Hudson)

Rembrandt is one of those names, like Nelson Mandela or Martin Luther King, that have ascended to a higher almost ethereal sphere and the person behind the name can only be lauded and lavished with imprecise praise. Shrink-wrapped and simplified for posterity, they are Famous and Exemplary and we are not invited to look too closely at their situations and achievements. Everyone knows Martin Luther King had a dream and that he was a good guy but that’s about it. And we know Rembrandt was a really great painter but not so sure what his greatness consisted in. The exhibition at London’s National Gallery (until 18 January), and two books on the artist, go some way towards taking the man off his pedestal and helping us see what is astonishing about his work.

Good painters are uncanny at playing with the movement of light and colours and Rembrandt is no exception in this regard but not all good painters can depict facial expressions with honesty, compassion and sublime skill. Rembrandt is the unrivalled master when it comes to faces. His abiding concern with capturing moods and emotional states as registered by posture and parts of the body, especially faces and hands, helps explain why he painted his own body some eighty times. Vanity, as you see when stepping into the first room of the National Gallery’s stunning exhibition, doesn’t come into it. The room has four self-portraits in oil and one etching, completed between 1659 and 1669, and they will bowl you over.

A day later I found myself in snooty Knightsbridge and a street mostly dedicated to high-end hairdressers and beauty parlours, one of which offered a ‘bespoke permanent make up service’. Rembrandt is the natural antidote to any such endeavour. He paints himself as he is: limp skin, slack jowls, wiry grey hair, drooping eyelids and a W.C. Fields-like nose. The self-portraits were painted during the years in which his common-law wife, Hendrickje, and his son Titus died, a period of grief compounded by his finances nose-diving into bankruptcy. When he died himself, aged 63, he was buried in an anonymous rented grave.

Read Post →

2

Peter Nyberg Bank Inquiry Evidence, 17 December 2014

, , Comment Closed

I do not think it is fair to say people partied. People just lived a little better than they otherwise would have done because of the bubble.” Peter Nyberg under questioning from Deputy Pearse Doherty, 17 Dec 2014.

Peter Nyberg’s appearance at the Irish bank inquiry marked the beginning of the context phase, the purpose of which is to set the scene for the causes and consequences of the bank guarantee and bailout. The context part is going to last for a few months, and it may not be until April before the committee starts calling people actually involved in the guarantee decision and its aftermath. So, for those looking for fireworks you may have to be a little bit patient I’m afraid. However, the context phase gives us the opportunity to do what it says – to place the guarantee within a wider framework than that of the personalities involved in the tense meetings of the night of 29 September 2008. It allows us to see the bigger picture; that is, if we want to see it. It is by no means certain that such a road is one that the various actors involved in Irish finance would choose for themselves. Alongside this, the committee is itself working within a context where narratives around the crisis have already been formed, most notably the “asleep at the wheel/regulators/bad apples/nobody understood/auditors/collective psychology” theme. I’ll come back to this later as this is something that popped up during Nyberg’s (quite dry and uninspiring) testimony, but it is worth flagging now because in the search for the truth as to what happened we have to deal with a story that has had six years to bed itself down. The analogy that is closest to explaining what I’m getting at here would be that of a cover story, but it is not as calculated and Machiavellian as that. We’re dealing here with an ideology – Nyberg admits as much in his testimony – and the way that the ideology of modern finance made sense of the world before the crash is the way that it made sense of the world after the crash. It couldn’t grasp the nature of the problem then, and it is incapable of making sense of it now. It knows that the problem was structural, but because it has such a vested interest in the continuation of those structures and practices, it has to find a way of addressing systemic failure without changing the architecture. Its solution, its way of squaring the circle, is to treat the crisis as a managerial problem. Asleep at the wheel / regulators / bad apples / nobody understood / auditors / collective psychology / etc etc etc. What is needed is better managers, better regulators, better auditors. It is a bit like if a car crashes because of faulty brakes, the solution is to find a better driver.

Read Post →

1

For Some Vicious Mole of Nature: Making Sense of The Irish Bank Crisis

, , Comment Closed

God will forgive them.
He’ll forgive them and allow them into Heaven.
I can’t live with that.”

Dead Man’s Shoes (2004)

What are we to make of the Irish Banking Inquiry, which began its public hearings last week. For myself, as I said in Shop Floor in September, I think it provides an opportunity for progressives and we should make use of it.

As to what I mean by that, well, take this quote from a 2012 paper by Gregory Connor, Thomas Flavin and Brian O’Kelly, entitled ‘The U.S. and Irish credit crises: Their distinctive differences and common features’, published in the Journal of International Money and Finance (available as a pdf here).

It is not clear that Anglo Irish Bank represented a systemic risk. Anglo Irish had a limited retail presence; it operated by making large-scale commercial loans funded by institutional borrowing. Other banks may have wanted Anglo Irish included in the government support schemes since, as was subsequently revealed, many developer loans with different banks were secured with the same collateral, creating a complex web that would be difficult and costly to unwind if Anglo Irish alone were allowed to fail.” (Connor et.al. 2012: 63)

The key to the Irish bank guarantee and subsequent sovereign debt crisis is right there in that complex web of developer loans with different banks. That’s the rabbit hole, the one we need to fall into, in order to make sense of this whole mess.

But let us be clear: although the loan book is key, this is not just about developers and their bets.

For example, the loans for commercial property speculation cannot be separated from the tax incentives approved by the Oireachtas and various finance ministers; nor from the legislative and regulatory environment that finance and property speculation demanded of, and received from, the Irish State.

Alongside the finance/speculator/state core lie the professional sectors that benefited hugely from this environment – that is, accountancy, law and real estate.

There is also the issue of the media in Ireland – private and public, the newspapers as well as RTE – which as a sector not only benefited from property speculation via ad revenue, but at a deeper level shared (and continues to share) much of the ideological framework which gave an intellectual sheen to such base and futile speculation.

When we take these dynamics and place them within a historical time-frame, we start to observe a reconfiguration of the Irish State, from the late 1960s to the mid-1990s, which parallels the shift in profit-seeking strategies within Western capital, from production to rentier. Ireland’s role as a comprador state, that stays the same, albeit one that shifts from the grazing fields of Meath to the glass towers of the docklands.

The best way to make sense of a ‘complex web’ of social, political, economic and cultural forces is to apply a relational approach, not a causal one.

A world seen through causality is binary, whereas a relational approach is dynamic – it allows us to see the various forces in motion, bouncing off each other, as they create new tensions and contradictions.

Read Post →

gram_letter

Antonio Gramsci: A New Year’s Letter

, , Comment Closed

This translation originally appeared on William Wall’s website on the 17th of December.

Antonio Gramsci (1891-1937) was one of the great political philosophers of the 20th century. Founder of the Italian Communist Party (PCI), he was imprisoned by Mussolini in 1926 despite his parliamentary immunity. He would spend the rest of his life in prison. He is most famous for his philosophical and cultural writings collected in various volumes as ‘prison notebooks’, often written on scrap paper, in a sort of code, and smuggled out to friends, in particular Palmiro Togliatti who would succeed him as head of the PCI. But he was also a father and family man, and many of his letters to his wife, his sister-in-law and his children still exist. Tender, amusing, nostalgic, loving and paternal, they show a different side to the great thinker. This letter, to Tania Schucht, his sister-in-law who had charge of his affairs, is a good example. It was probably written on the prison island of Ustica.

The text of this letter comes from Fiabe, Antonio Gramsci (Edizioni Clichy, Firenze). I am grateful to the editor, Tommaso Gurrieri for his approval of this translation. The translation is Creative Commons, as is all my work on this blog. See the note at the end of this page.

Dearest Tania,

And so the new year has begun. It is necessary to make plans for a new life, according to tradition: but even though I have thought a lot about such a plan I have never managed to achieve it. This has always been a great difficulty in my life from my earliest rational years.

In those days the elementary schools would assign, at this time of year, as a theme for composition, the question: ‘What will you do with your life?’

A difficult question, which I resolved for the first time, at eight years of age, fixing my sights on the profession of carter. I found that the carter unites all of the characteristics of usefulness and delight: he flicks the reins and guides the horses, but, at the same time, he performs a work that ennobles the man and earns him his daily bread.

Read Post →

irish_Pt

Right2Water and Podemos

, , Comment Closed

Peadar Kirby has written a piece expanding on his criticisms of the Right2Water campaign, locating them within a wider critique of what he calls Ireland’s politics of anti-austerity. He is pessimistic about the possibilities of the current mass mobilisation against austerity in Ireland, and contrasts the situation in Ireland with the situation in Spain, where as he sees it Podemos is on the verge of taking power ‘not through a politics of opposition but through a serious politics of proposing an alternative that is credible to large sectors of the citizenry’.

In this post I wish to highlight some further similarities and differences between the cases of Ireland and Spain, and in doing so, question some of Kirby’s criticisms.

Kirby is critical of the ‘politics of opposition’ rather than a ‘politics of proposal’ in the Irish case. He thinks the anti-water charges campaign ought to articulate fully how the right to water ought to be guaranteed, since, as he sees it, the likely consequence of the campaign should it prove successful will be to winnow away further at this right. This criticism relies on a strict interpretation of the right to water as codified by the UN. I agree with Kirby and others that when people are campaigning against water charges, they are not campaigning for a fully articulated and costed solution for the provision of water in keeping with UN accords. They are doing so because they feel they and others will be impoverished by water charges. But they are also doing so because they recognise that the imposition of water charges is regressive and hence unjust, and the demand for water to be paid for out of progressive tax measures, and the demand against privatisation, which are both very common in the campaign, are not calls for stripping away the capacity of the State to provide public services. On the contrary.

It is true: there are no detailed concrete proposals to this end. Kirby thinks this is a big problem. I don’t. And here is where I begin to part company with his analysis. In drawing attention to the rise of Podemos in Spain, Kirby omits the cycles of mobilisations that preceded the rise of that organisation. These mobilisations stretch back more than a decade now: from the mobilisation against the Iraq war to the V de Vivienda campaign for a right to housing to the Juventud Sin Futuro campaign, and, crucially, the 15M movement that called into question the very legitimacy of Spain’s political system, its right to call itself a democracy. And on from the 15M to the various Mareas?—?in defence of public healthcare, public education, emigrant rights, abortion rights, as well as the resounding achievements of thePlataforma de Afectados por la Hipoteca in mobilising public opinion against evictions.

Read Post →

3

The Disillusioned Citizen

, , Comment Closed

The disillusioned Citizen

As I sit in my cold, cold house

Sticking bubble wrap to my single glaze,

The slap of the letter box like a slap to the face,

Cold as the air, in an unemployed haze.

s

Each day the horrors of my future lie in suspension

No letters of job offers, hope and acceptance; its beyond comprehension.

Dangerous ground the post man dictates,

My mood, my emotions, my worries, my fate.

s

Plenty of bills though, they keep rolling in,

Unwanted, unopened and thrown in the bin.

For their demands just cannot be met,

It’s a number of weeks till my house is for let.

s

Never have I experienced such rejection,

Something is wrong with this country, a malaise; no, an infection.

A glitch in the system, an error of ways,

The dismissal of citizens through their ivory tower gaze.

Read Post →

paintingsetfree

The Power of Paint

, , Comment Closed

Exhibition Review: The EY Exhibition Late Turner: Painting Set Free

Turner turned 60 in 1835 and the paintings and watercolours he went on to produce are the subject of the exhibition at Tate Britain (running until January 2015). Work labelled as ‘late’ can carry a double-edged evaluation, pointing upwards to acclaim  ascent to new ground or downwards to indicate a decline into staleness. It can go either way: late Heidegger is radical, late Wordsworth is drearily conservative and if late Dylan comes into the equation the term’s uncertainty wobbles close to collapse.

Tate Britain’s tag line for late Turner, Painting Set Free, makes clear the gallery’s pitch, indicating that we view these post-1835 works as a liberation from classical canons and traditional notions of art as merely pictorial representation. Turner, suggests the sub-text, was a modernist avant la lettre who prepared the way for Impressionism, anticipated the spirit of abstract art and educated our sensibilities towards receiving a non-mimetic notion of art.

This has been a familiar way of viewing Turner for half a century now so there is nothing shockingly new in Tate Britain’s approach but what does distinguish this exhibition is the concentrated gathering in one space of so many works by Turner over a precise period of time. The result is a visual feast that takes narrative moments from myths, the bible and history and stirs in a heady blend of watery mists and hazy but vibrant colours to enact ethereal dramas of light and dark.

The atmosphere of his paintings comes from light-drenched vistas that exist independently of whatever set of humans, nymphs, gods or goddesses happen to inhabit one portion of a canvas. Turner is not afraid to add touches of impasto while remaining loyal to his palette of airy blue, creamy to murky white, golden yellow, russet that mutates to scalding red and burnt orange.

Read Post →

mbT

If this is a recovery why are people getting poorer?

, , Comment Closed

On the same day that the CSO reported that the economy grow by 3.5% from a year ago, the Irish Times reported deepening gloom among households with survey respondents reporting decreasing disposable incomes. 45% of people said they were spending more on utility bills, and many others reporting increased costs of transport, healthcare and housing.

How is it both possible for the economy to be expanding at a decent clip yet the population is becoming poorer? Leaving aside the possibility that the population is expanding at a faster pace than the economy (which is not the case here), then either the data is false or all of the benefits of recovery and more are going to a minority of society. Or both.

The reality is that the CSO vastly overstate the improvement in the economy, which in reality is doing little more than bumping along the bottom. At the same time, the austerity policy works to redistribute incomes from poor to rich, from labour to capital, especially unproductive capital such as banks and landlords. If energy bills are rising in real terms incomes are being transferred to them from households. If rents are rising, real incomes are being transferred from tenants to landlords, and so on.

Fake exports, real stagnation

The export-led recovery that is so widely touted by supporters of this government and of austerity generally is a statistical fiction. Over time a number of commentators have pointed to the tax regime as a source of huge distortions to the external accounts. This facilitates the booking of costs, output and profits in this jurisdiction in order to avail of extremely low effective tax rates, way below even the headline rate of 12.5%. Constantin Gurdgiev at True Economics has also shown that this is a key factor in the current inflated level of GDP.

One marker of this distortion to the trade data is that the monthly CSO accounts show total goods exports of €23.2bn in the 3 months of Q3.  Yet the data included in the Quarterly National Accounts show exports at €27.3bn. There is a different methodology for the two pieces of data. But there is a truth gap between the real level of goods exports and reality, which has widened over time. In 2008 the export totals were almost aligned, with the GDP data showing exports just €1.8bn higher for the whole year. Now that annualised discrepancy amounts to €16.4bn. This is greater than the entire recorded improvement in real GDP since the trough of the recession at the end of 2009, which is €15.7bn. Without the fakery of an ‘export-led recovery’, statistically there is no recovery at all.

Because the export data is so distorted, it is important to consider the trends in aggregate domestic demand, which is the sum of household consumption, government consumption and investment (Gross Fixed Capital Formation).

Fig.1 Real Final Domestic Demand, €bn

MB1

Read Post →