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Tag Archives: crisis

Before reading watch and listen to Yanis Varoufakis in this Youtube clip. He’s not talking revolution. He’s not even talking socialism. Indeed he’s on about that most liberal of fashions, value free, “evidence based” policies. How this could lead to a crisis requires explanation.

Ok, that was the former Greek Finance Minister making a persuasive case for old fashioned, liberal Keynesianism. This was a view that was growing in popularity in the public press and on-line in the months before the Greek election. Reading and listening to Syriza before the election it seemed that they were just doing the routine, familiar, populist anti-austerity pitch for votes. After the election they changed to an emphasis on negotiation and the sort of position outlined in this video. It was a very encouraging development and it raised the hope that Syriza might strengthen or lead the emerging consensus. That consensus was certainly not socialist or even mildly egalitarian but rather the creation of a functioning liberal economy – yes, ripe for leftward reforms but the left would defer that until a reasonably stable and prosperous liberal economy had developed. Clearly it would be difficult if not impossible to get a liberal deal of this kind through the Greek parliament without the support of the older centre-right and centre-left parties. However, somewhere during the months of negotiation the Keynesian position disappeared. Towards the end the German Chancellor insisted that any deal would have to be approved by the Greek Parliament. In doing so she inadvertently hastened the end of negotiations and saved Syriza’s unity. In the week before the IMF payment was due there were two sets of proposals: the creditors’ ultimatum and Syriza’s.  As the Greek Finance Minister insisted, there was nothing much between them. Then the P.M. decided on a referendum to accept or reject the ultimatum. There needs to be an enquiry into these negotiations because it is simply not plausible that the argument advanced by Yanis Varoufakis in this video caused a crisis.

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There is a number of protests looming in Ireland which oppose the state making payments to speculators and chancers. The 99% Network is featuring the slogan, “We don’t owe, we can’t pay, not our debt”. Let’s take 1 and 3. There is – as far as I can see – COMPLETE (right to left) Irish agreement that there is no legal or moral obligation on Ireland to pay these debts. We are being compelled to pay them because we are in a weak position: we are supplied with money fortnightly to pay welfare and public servants and our paymasters want us to pay these chancers/speculators. The question now is should we give in to our paymasters? The answer depends on what the consequences of refusing to pay might be. No one knows for sure what the consequences of non-payment would be. The possibilities range from none (Our paymasters will simply say that non-payment is ok.) to catastrophic (Our paymasters will cut off money to pay welfare and public service wages.). Calls for non-payment – assuming they are serious and not just populist lies to attract support – are therefore either calls to gamble – and to gamble with the incomes of some very poor people – or to try to provoke the catastrophic and hope that revolution will follow which will usher in the kind of society in which our current predicament could not be repeated. This, however, is another gamble on the security and income of those same people because revolutions tend make things much worse before building something which might be better. No. 2 – “We can’t pay” – is quite different. It involves having or not having the money to give to the chancers. Right now, we clearly can pay but at enormous cost. Right now, the paymasters don’t much care about those costs and think that this can continue. This leads back to refusal to pay or to the only RELATIVELY safe and prudent course: We keep on paying until we can convince our tormentors and our international “friends” with influence that the cost is too high and amounts to “can’t pay” by anyone’s standards or until some unforeseen development affords the country an opportunity to act.

All this talk of betting, prudence, honesty and letting chancers away with it for fear of doing more harm is boring and inactive. Many leftists prefer the protest route which is familiar. It’s hard, you see, to face accusations that because you are fearful and want to play safe that you support the inegalitarian cuts in state spending. Moreover, trying to capitalise on the crisis by arguing/campaigning for the kinds of change which can be achieved while still paying the chancers is hard too, especially when the field has been vacated by so many leftists.

As a socialist and long-time member of the Labour Party I am very troubled by the Party’s present support for reducing the income of the poor and reducing public services. As I’ve said elsewhere, I don’t see much option to paying the chancers/bond holders as the troika ask us because I fear that failure to pay up might bring on greater misery. That leaves the state very, very short of money and moves one question to the top of the agenda: What are our priorities when it comes to reduced public spending?

I would prioritise the employment of teachers and SNAs, “free fees” at 3rd level, the maintenance of HSE services, the income of low paid public servants (not in that order and plus some others) way, way above maintaining the present income of those in the category, “wealthy” who are also in public service employment. If this priority is accepted, then we need to think at what level would a public service income ceiling need to be set in order to make the required cut without affecting the priorities listed above? I find it bizarre that while we can debate unpalatable cuts because we are in crisis, the question of solving or partly solving the problem by limiting ALL public service incomes to, say, 100k for workers and 50k for pensioners is – it would seem – out of the question. Jesus wept, 100k and 50k are generous. They would appear a king’s ransom to most of the people Labour has traditionally defended.

The Croke Park agreement will be cited against this proposal but it cannot be used to censor discussion. The problem with that agreement is that it defends equally the incomes of the rich as well as the poor among our public workers.

Right now we need to enlarge what we mean by “rich” beyond the 1% normally highlighted in leftist talk to at least the top 10% of income receivers. I think a problem for Labour and the left generally is that with a tradition of attacking just the 1% and a gut reaction of “let’s burn the bond holders”, they quite simply don’t have a plan B to make progress in the reduction of inequality when the 1% has us by the balls. What I’m saying is this: Ok, we may be forced to pay these international chancers but within the spending under our control, how can we move towards reduced inequality of income?

There is a Labour Party members’ meeting tomorrow to consider “What way out of the Economic Crisis? Can the EU/IMF deal work?” I wish I could attend. Here are some basic thoughts that I would have liked to put to the meeting.

Two points are worth making at the outset. Firstly, I’ve no great expertise in economics and such expertise is not necessary to participation in the controversy. Secondly, I’m concerned that the Labour Party might tear itself apart, leaving no large coherent left voice.

Agreement

  • Absolutely everyone agrees that Ireland is in an extraordinary mess and cannot pay off all of the debts.
  • Absolutely everyone agrees that i) the domestic economy needs to be primed and ii) “industrial” development is urgently required.
  • Absolutely everyone accepts that cuts to private income and services together with massive repayments are incompatible with i) and/or ii).
  • Absolutely everyone thinks it wrong that as regards the banks, public money should be used to pay private debts.

Disagreement

  • The government – aware that public service wages and welfare payments depend on the fortnightly delivery of European money – think it prudent to stay on very good terms with those who for now have the upper hand and to try to make progress slowly towards somewhat less of a mess which has a possibility of resolution in the long term.
  • Leaving liars and poseurs aside, thoughtful opposition to this approach comes from essentially two quarters, one of which believes that failure to play ball with international capitalism will have no real consequences and the other which believes there would be welcome consequences with revolutionary potential.  These opposition approaches can be summarised as a) “We can default and nothing much will happen; we can be like Iceland.” And b) “We can default, there will be crisis leading to revolution and eventually a socialist society. “
  • The FG part and very likely some of the Labour part of government, and the a) defaulters share an objective: the restoration of a prosperous, unequal society.
  • The a) and b) defaulters share an unwillingness to face up to the risks of what they propose, i.e. they won’t talk about the chaos and suffering which would follow a crisis of capitalism.

Taking sides

I’m with the government because I fear crisis. I know damn well that it will be the poor who will suffer most if the crisis happens.

This does not mean acceptance of a grossly unequal society but this is an argument for another day: https://colummccaffery.wordpress.com/2011/12/01/irish-sovereignty-may-be-reduced-but-the-power-to-prioritise-remains/