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Michael Taft writing in Unite’s Notes From the Front reports favourably on Switzerland’s 1:12 initiative and other moves to reduce inequality of income.* This is really good stuff from Switzerland and it’s the sort of approach the Irish Labour Party and the left generally should be taking: Link top pay to the minimum wage or the pay of low paid staff members. Moreover, every initiative, every policy, every budget should be evaluated with reference to inequality of income. I might add that every cut in public expenditure should be similarly evaluated. Since 2012 this kind of equality audit has been Labour Party policy but it’s a well-kept secret and labour’s critics on the left show not the slightest interest in it.**

The notion of limiting top pay to a multiple of the lowest pay appears in the thinking of even the British Conservative Party.

I put forward an argument that the first cut in the public service pay bill should be a cap on pay and extras of 100k and a 50k ceiling on pensions. It was met with hostility to the extent that I couldn’t get my own branch or constituency Labour Party to put it on the 2012 conference agenda.*** How about now putting it to a plebiscite now?

There were other proposals. One was to call the bluff of those who said that increases in the minimum wage would close businesses especially in the hospitality industry. The suggestion was that the minimum wage would be payable only within companies whose top earning staff member or director had an income of less than, say, three times the minimum wage; all other firms would pay the minimum wage plus, say, three euro per hour. Another was that state contracts would be confined to companies whose top earning staff member or director had an income of less than, say, three times its lowest paid staff member or, say, four times the lowest paid staff member in any of its contractors.

The multiples can be debated and indeed changed periodically. The important point is that inequality of income becomes a matter of public controversy.
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* http://notesonthefront.typepad.com/politicaleconomy/2013/10/a-few-referenda-ideas-that-just-might-succeed.html
** https://colummccaffery.wordpress.com/2012/10/08/inequality-of-income-can-labour-put-it-on-the-public-agenda-and-achieve-some-reduction-while-in-government/
*** https://colummccaffery.wordpress.com/2012/05/08/prioritising-public-spending-and-reducing-income-inequality-in-the-public-sector-a-motion-which-failed-to-make-the-agenda-for-the-labour-party-conference-2012/

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Have a look at this article by Gene Kerrigan: http://www.independent.ie/opinion/columnists/gene-kerrigan/dirty-little-secret-is-that-those-at-the-top-feel-no-pain-29618475.html Comments on it are now closed. However, while comments were invited I attempted three times to post a comment. Each time a system message appeared to say that the comment had been received but it was never cleared for publication. There’s a small part of my character that is flattered by being censored. Here’s the comment that the Indo wouldn’t permit under the Gene Kerrigan article.
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This article is of a type. It is conservative behind a veneer of leftism. It attempts to limit “rich” to the top 1% and this allows the majority of the rich, say, the top 10% or perhaps the top 20% to hide. They can even pose alongside the poor as fellow victims of austerity and claim to be paying more than their “fair” share.

The article manages to ignore its own data. Have a look at this:
“In the period 2002-2009, the top 10 per cent of earners took 35 per cent of the income.

In 2010, according to the Central Statistics Office, the lowest-earning 10 per cent took a 26 per cent cut in disposable income. Middle earners were cut by 12 per cent. The top earners got an 8 per cent increase. This isn’t because they work harder.

Among the top 1 per cent, just over a quarter of their income comes from work, the rest comes from capital. Over the past 30 years there’s been a shift, with a higher and higher income share going to capital – rents, shares and bonds – and an ever-decreasing amount going to labour.”

Notice some features here which are typical of this type of writing: i) The top 10% with 35% of the income who are mentioned first, suddenly disappear. ii) “Middle earners” appear and they are presented as hard done by. (“Middle” is the hidey hole of the majority of rich people: https://colummccaffery.wordpress.com/2009/10/09/middle-income-and-a-distortion-of-public-debate/ ) iii) The trick is completed not simply by reducing “rich” to the top 1% but by saying that their income is suspect in contrast to hard-working rich people who choose to label themselves “middle”.

What’s going on here is that a conservative argument is masquerading as progressive. Essentially what it is saying is that if we could just soak the elusive 1%, the rest of our structure of inequality could be adequately financed in a “fair” way (https://colummccaffery.wordpress.com/2012/09/18/fairness-has-become-the-conservatives-shield/ ) and the vast majority of rich people on multiples of the minimum wage or indeed multiples of the average wage could continue to enjoy their relative advantage. Indeed, if the top 1% manage to evade controls, nothing at all should be done about income inequality because it wouldn’t be “fair” to take from some rich people unless all similarly rich or richer people were tackled at the same time! (https://colummccaffery.wordpress.com/2013/01/03/how-concerned-are-you-about-horizontal-fairness/ )

Let’s be clear. This was an Irish scam. Lending companies had access to lots of relatively cheap “international” money. This was “imported” and lent to the relatively poor so that extraordinary property prices could be paid to the rich.

In terms of page-one economics the price of a house was determined by whatever people were prepared to pay. The graph shows that income and costs increased steadily but house prices took off on a bewildering upward trajectory.
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From Michael Taft’s Notes from the Front. http://notesonthefront.typepad.com/politicaleconomy/2013/06/the-hulk-says-crush-household-debt.html

Traditional lending conventions linking income with loan size were dropped in order to maximise borrowing and this made large payments to the rich chancers possible ( https://colummccaffery.wordpress.com/2012/05/27/if-the-banks-and-building-societies-were-giving-crazy-loans-which-could-not-be-repayed-by-how-much-should-we-penalise-both-their-and-their-customers-foolishness/” ). The scam was greased by making some people desperate (“You need to get on the property ladder.”) and by convincing others that they too could be successful speculators (“It’s a no brainer; property prices don’t fall in Ireland.”).

The interesting question is this: How did so many people fall for the scam? Firstly, it needs to be emphasised that not everyone fell for it. Secondly, while citizens correctly expect those of their fellow citizens who are paid to think, manage and comment to warn them of scams, they were sorely let down. I’ve argued elsewhere that these well-paid failures who did not speak out time and again either because they were too stupid to see the scam or so lacking in integrity that they abandoned their jobs to hide within the scam, should now be moved to jobs more suited to their shortcomings. In short a significant portion (perhaps a majority) of Ireland’s professional elite has been exposed as thick or turpid or both. ( https://colummccaffery.wordpress.com/2013/05/12/they-are-known-to-be-useless-and-they-are-all-still-there-a-reminder-from-eddie-hobbs/” )

It is, however, a mistake to view all of the victims of the scam as blameless. No matter how many times managers and media encourage a person to be foolish there remains a personal obligation to be prudent. Of course there are times when a scam is so well done that little or no blame can attach to the victim but that is not the case in relation to the Irish lending scam. Despite the elite chatter and media torrent in support of foolishness, ordinary conversations about the dangers were commonplace and there were many warning voices which could have been heeded. Moreover, as the scam developed there was increasing concrete evidence in plain sight sufficient to warn all but the wilfully blind or the addicted risk-taker.

Young people are particularly vulnerable to scams and are often preyed upon. The property scam was no exception. The pressure to “get on the property ladder” was relentless and in a just world a nasty fate would await anyone who dispensed this advice – especially when it was dispensed as it became more and more clear that the end was approaching.

Mature victims drawn into a reckless gamble were less vulnerable and their fellow citizens should be less forgiving of their stupidity and/or avarice.

The argument that the victims should be bailed out for reasons different to those offered for baling out the banks is untenable. There was no moral or legal reason for baling out banks. Leaving aside young people and cases where no blame could attach, there is no moral or legal reason to bail out victims of the scam either. However, a functioning liberal economy or the view that these people in aggregate qualify as “too big to fail” may be very good reasons why careful, thinking citizens will have to bail out these people as well as the banks.

Anyone active in collective bargaining over the past few decades will be well aware of the offer and acceptance of “allowances” when the demand was for a pay increase. It is therefore ridiculous to categorise all allowances as some kind of luxury extra that can be cut without touching basic pay.

Any restructuring of the public service which fails significantly and very obviously to reduce inequality of income in the public service is a failure for the Labour Party.*

The final details have yet to emerge but all of the indications particularly over the past week suggest that the Croke Park 2 agreement has been poisoned by the conservative doctrine of “fairness”.**

It goes like this. Because it is planned to cut “allowances” for “frontline” workers, “fairness” demands that highly paid workers who don’t get allowances have their pay cut too. In other words, we are back to “sharing the pain” and leaving the structures of inequality intact. It is certain that rich public servants will be cut by proportionately more but clearly they are much more able to absorb small reductions even when these are expressed in impressive percentages.

It is of course a matter of the Labour Party being outmanoeuvred by market liberals and failing to reduce inequality but it is also a question of leftist acceptance of enormous levels of inequality while maintaining a vestige of credibility.*** Credibility is secured by talking about merely the richest 1% and arguing that it would be “unfair” to tackle one group of rich people unless all rich people can be similarly affected. Even opponents of Labour in government and those on the left whose ambition it is to destroy Labour effectively support inequality of income.
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* I am a longtime member of the Labour Party.

** https://colummccaffery.wordpress.com/2012/09/18/fairness-has-become-the-conservatives-shield/
https://colummccaffery.wordpress.com/2013/01/03/how-concerned-are-you-about-horizontal-fairness/
https://colummccaffery.wordpress.com/2012/10/08/inequality-of-income-can-labour-put-it-on-the-public-agenda-and-achieve-some-reduction-while-in-government/

*** https://colummccaffery.wordpress.com/2012/05/08/prioritising-public-spending-and-reducing-income-inequality-in-the-public-sector-a-motion-which-failed-to-make-the-agenda-for-the-labour-party-conference-2012/

Here’s Roisin Shortall on Marion Finucane’s radio programme. Listen as she tries to be polite, answering the questions that would reduce substantial political differences to gossip about personal relationships.

http://www.rte.ie/radio/radioplayer/rteradioweb.html#!rii=9%3A3404310%3A70%3A29%2D09%2D2012%3A

Here are a couple of quotations from Roisin’s interview. a) “I don’t believe he [Minister Reilly] subscribes to the Programme for Government”. b) There were fundamental differences in relation to the policy area and the way the health service was to develop.”

Media coverage since the resignation has tended to depoliticise the controversy. From the outset it was clear that there was a very basic political difference over the importance of deprivation as a criterion for deciding the allocation of state resources. However, media workers decided that they would ignore the obvious and frame the resignation in a quite different way. The “story” was made to conform to media orthodoxy: that politics is about personal relations and venal ambitions, and the “good guys” are those who oppose the “political class” and make them occasionally “U turn”. Not only does this work to position the worst journalists as among the “good guys” but it is essentially conservative, in the literal sense that it opposes change.

It now emerges that the resignation is a defence of the Labour elements in the Programme for Government and about the choice of whether left or right wing political policies will shape a new health service.

It is very damaging to public political discourse when journalists positively strive to descend to gossip with the likes of, “Yes, yes, but what did he say to you at the meeting?” or “Did you ever talk over a drink?” or “Do you feel let down?” Citizens eager to engage with controversies affecting the shape of the republic deserve better – much better.

One of the best courses I took at UCD years ago was John Baker’s course in Political Argument. I opted to do an essay on Fairness. It turned out to be complex and interesting. Don’t worry, I won’t give details. However, I’ve lately been commenting on how “fairness” has come to be such a weasel word, used to signal virtue without saying anything very much.

This morning I heard Micheál Martin interviewed on RTE Radio and he was stressing the importance of “fairness”. Needless to say, the interviewer didn’t ask what was meant by the term. If it retains any meaning in political discourse, it now means doing nothing that would change the existing structures of economic inequality. It means that if there are to be charges or cuts, then everyone will pay and perhaps the rich will pay a little more but their income must remain so many multiples of the minimum wage.

What it boils down to is this: “I’m paid ten times the minimum wage because I’m worth it and the market says so. We live in tough times and I’m prepared to do my bit but it wouldn’t be fair to reduce me to five times or even eight times the wage of a café worker.”

Jesus wept! The interviewer didn’t even ask!!!

The essential thing that is particularly annoying citizens right now as “austerity” bites is inequality of income or, rather, hideous levels of income inequality, the very structure of inequality. Now one way that the political right seeks to maintain the structure – with all its relativities – is to talk about inequality between groups. They’ll have a go with age vs. youth, public sector worker vs. private sector worker, rural vs. urban etc. It is a conservative position; the idea is to have no change or very little change in relativities while reducing wages and welfare payments to the poor. Against that, far too many on the left advance an argument whose effect is also conservative. They identify the very rich (the 1%) as opposed to the merely rich (let’s say, the 10%) and argue that if the 1% could be soaked, then all else could remain the same. This is a conservative stance.

Minister of State, Brian Hayes has been targeting pensioners for cuts by pointing out that some pensioners are well-off. [i]  Michael Taft is a socialist economist but in responding to Brian Hayes, even he argues that rather than pursuing pensioners, a “better” target would be the management-and-professional category/interest group. [ii]  Now this comes close to demanding change but the conservative flaw remains. Most of those in this category are rich but not very (1%) rich. However, as Michael concedes, not all are rich. That’s too much like the argument that Brian Hayes makes in relation to pensioners. It diverts attention away from “rich” and towards an interest group and so implicitly supports a view of society made up of competing interest groups, a view which papers over the inequalities of income within many of these groups.

For as long as the democratic left defends or attacks the economic positions of pluralist groups, the structure remains unchallenged and the right wins. Let’s face it there are rich managers, there are rich pensioners, there are rich public sector workers, there are rich farmers etc. All that separates these groups is the proportions of rich within them.

It would be far better to call the right’s bluff on each and every sectoral target. Let’s define rich in income terms (Yes, of course I realise that income is not the only measure!) and say that below that point income will not be touched but above that point, “Go ahead, cut!”[iii]

Here’s a motion which twice failed to get the support of ordinary members of the Labour Party and so didn’t make it onto the agenda for Conference 2012.

As a first move in establishing a priority list for current public spending, Labour marks the maintenance of public sector incomes above 100k p.a. and public sector pensions above 50k p.a. as the lowest priority. That is to say, in the event of any further reductions in public spending, Labour identifies the first cut:  a 100k p.a. income ceiling for public sector workers and a 50k p.a. ceiling on public sector pensions.

Here’s the argument:

Let’s be clear

This proposal has nothing to do with taxation. If taxes were raised or if a new rate of tax were introduced and if the money so raised meant that there would be no need of further cuts in public spending, then this proposal would be redundant. The point here is this: if there are to be cuts, what area of public spending is least important, what should be cut first? This proposal answers: if there are to be cuts in public services and/or the incomes of relatively poor people who depend on the state, then those cuts should be considered only after the incomes of the rich who are on the public payroll have been capped at an affordable and sensible but generous level.

 

The immediate background

Leaving aside revolutionary and populist posing, the bulk of expressed opposition to cuts in state spending has involved particular pleading.  Then our media – in making no demand that something constructive be said – have compounded the problem. Journalists and presenters fail time and again to ask the most obvious question: “If there must be cuts and you feel that ‘X’ has to be maintained, which areas of spending do you think are less important than ‘X’ and should be cut first?” The lack of stated priorities has ensured that cuts are spread and this has tended to copper-fasten existing deprivation and inequalities.

I have been arguing on FaceBook and elsewhere that the rich among our public servants are the least of our concerns and that income (to include pay, bonus, overtime, allowances etc.) and pension ceilings should be introduced before any other cut. While there has been negative reaction, there has also been support and some of the support has been to the effect that the proposition should be put to a Labour Conference.

 

A fundamental question for Labour at this time

Because revolution and populist posing must not feature in Labour thinking, a major and significant question looms, and it demands an answer now: What remains of Labour values when state spending must be cut? Two very old and basic Labour tenets begin to harmonise and form at least part of the answer. Firstly, while equality is central to Labour’s ambitions, the Party has been slow to emphasise the most crucial and controversial aspect of equality: equality of income or – at least – reduced inequality of income. The time is ripe to put that right. Secondly, Labour has always sought to defend the meagre incomes of the poor. Never was this more urgent.

A pay ceiling on public service incomes and pensions would

  • accept that money is tight and that we cannot have everything but that some spending is vastly more important than others, and lay down a marker that a start has been made to setting priorities for Irish public spending;
  • make savings in public spending such that vital services and the pay of poor and middle income public servants could remain untouched;
  • reduce the bizarre and shameful spectacle of rich people beside poor people on the public payroll;
  • place inequality of income on the public agenda;
  • make it clear that Labour in bad times and in good times is serious about reducing inequality.

 

Arguments against

There are of course arguments against. Actually there are basically just three arguments against:

i)             The fairness argument

ii)            The brain drain argument

iii)           The Croke Park argument

 

i) The fairness argument says that public servants should not be singled out and that nothing should be done unless all rich people are tackled. In a sense this is a “what about?” A “what about?” is very much a conservative position which hides opposition to a change by diverting attention to other – often larger – issues. In this case, limiting the income of rich public servants is opposed by diverting attention to the income of other rich people. In another sense it is a crazy distortion of the notion of equality because what it says is that it would be unfair to reduce the incomes of one set of rich people unless all rich people were similarly treated. That is to say, it is a demand that all RICH people be treated equally!

It needs to be emphasised that it is public money that is in short supply, that cuts are happening now and that clearly public sector pay can be cut. In other words, there is neither time nor compelling need to be concerned about other rich people.

ii) The brain drain argument takes two linked forms. It is said that a reduction in top pay among public servants would result in a flight of talent abroad or into the private sector. It is certain that some may flee. However, the idea of a mass flight is fanciful. There may – just may – have been a time when a dissatisfied public worker could walk and pick up a job in the private sector. That certainly is not the case today. Moreover, this is a familiar threat raised by the rich from time to time. Remember when bank bonuses had to be paid or there would be a flight of talent? It didn’t happen.

 

Another form of the argument suggests that a ceiling would prevent the recruitment of exceptional talent. This rests on an abuse of the word “exceptional”. A pay ceiling would not rule out exceptional pay for an exceptional talent in exceptional circumstances. It would control the income of numbers of ordinary, unexceptional, rich workers.

iii) It is pointed out that the Croke Park Agreement rules out a pay ceiling. This is true. However, it does not rule out talking about a pay ceiling. Moreover, the extent to which the CPA guarantees that a group of rich people stays rich needs to be discussed and addressed.

 

Summing up

  • Let’s face it: 100k or a pension of 50k would appear a king’s ransom to the ordinary people who are made to pay these rich people or whose services are cut to maintain them. No one could seriously argue that these ceilings are not generous.
  • A public servant or potential public servant so in thrall to money that they will not serve unless paid more than 100k is clearly “the wrong stuff”. Get someone who understands the meaning of public service!
  • We live today in the kind of times so strange and fraught that a proposal once thought unimaginably daring becomes ordinary and feasible.
  • While in government in a time of crisis and austerity, Labour desperately needs to rediscover its radical voice and fundamental tenets.
  • It is possible without upsetting the troika too much to use what sovereignty we have left to make a start on a less unequal society.

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/

Paula Clancey of Tasc in a recent talk ( http://www.youtube.com/watch?v=q05VebLgHfc ) made reference to a statistic, which is both appalling and attractive. It is attractive because it provides a measurable route to greater equality.

She says that in Ireland the disposable income of the top decile = (The disposable income of the bottom decile) X 11!

How about this as we think about the fast approaching formation of the next Irish government ?

That the basic precondition for Labour Party participation in ANY coalition be a programme as follows:

End of year 1: The disposable income of the top decile = (The disposable income of the bottom decile) X 10

End of year 2: The disposable income of the top decile = (The disposable income of the bottom decile) X 9

End of year 3: The disposable income of the top decile = (The disposable income of the bottom decile) X 8

End of year 4: The disposable income of the top decile = (The disposable income of the bottom decile) X 7

I’d be more than happy if the Labour Party wanted to move further or faster but the proposal above has the attraction of being both radical and very modest.

As Ireland settles into a very difficult debt-ridden future, media appeals to our Irishness become ever more common: we are asked to act “in the national interest” and told that, “We are all in this together”. It bears repeating time and time and time again that appeals to solidarity such as “WAAITT” mock the poor. Of course it is possible to have solidarity in an unequal society but it is utterly impossible in a grossly unequal society.

The problem is that EVERYONE is in favour of equality until someone spoils the sanctimony by talking about inequality of INCOME. Yes, that was “income” and not the familiar “wealth” which can be an evasion.

If you agree with any of the following equations, what value would you give to “X”?

Max. income = X(min. wage)

Max. income for a public servant = X(min. wage)

Max. income for an employee or director of a company in receipt of state aid, grant, contract etc. = X(min. wage)

Ferdinand Von Prondzynski is at it again in  The Irish Times of Tuesday, November 9, 2010. He argues that there is no way adequately to fund universities without the reintroduction of fees. That may be so but it is long past time to hear his argument stripped of nonsense.

Something needs to be said at the outset: There is no connection between fees and the fact that poor people don’t go to college. Poverty determines one’s level of ambition and educational attainment, and keeps the poor away from third level education in any significant numbers. Apart from, let’s call them, access interventions which seek to increase the number of exceptions who get to college from poor backgrounds, any real change will require a systematic assault on poverty.  

Ferdinand offers a strange view that ‘free fees’ has undermined public understanding of inequality. Firstly, he seems to think that “many people” are beguiled by the absence of university fees into thinking “that we live in an egalitarian society in which access to this vital stage of personal formation is free and available to everyone, regardless of background or means.” I have never come across anyone who has so lost their grip on reality as to think like this. Secondly, he argues that the position of the deprived has “in some ways” been made worse “because some well-meaning people thought that ‘free fees’ had solved all social disadvantage problems and that no further resources were needed.” As before, I doubt that anyone thinks like this.

“What changed in the 1990s”, he says, “was that the rich no longer needed to pay and, to be fair, that some middle income groups now found it easier to afford college.” This is partially true but distracts attention from the fundamental improvement that has been ‘free fees’. Certainly rich people, even fabulously rich people, no longer pay fees. However, truth disappears in draining the word, “afford” of all meaning. My recollection of the days of paying fees has as typical, say, a technician on or slightly above the average industrial wage struggling hard to find fees to send a son or daughter to college. In some cases there was a need to find the money for fees for more than one family member. It is downright wrong to speak of such people being able to afford fees. The truth is that the removal of fees relieved many families of a dreadful burden.

Finally, Ferdinand says, “It is maybe a harsh thing to say, but “free fees” have amounted to a major redistribution of resources from the poor to the rich.” This is a plainly bizarre claim. I assume that it is based on the hope or possibility that the fees money which the rich and the likes of the struggling technician would have paid might have gone to the poor.

In the Irish blogosphere I’ve pursued Ferdinand on this issue. He steadfastly refuses to confer meaning on his notion of “afford”, to say who should pay fees. His is an argument of an all too familiar type which offers that simple solution: the rich will pay and all will be well for everyone else. The truth is that unless the majority of students pay fees, the income will be small and, no matter who pays what, the poor will still be excluded.

Ferdinand’s blog is here:  http://universitydiary.wordpress.com/

By all means let’s have a public debate over university funding and fees but let’s first clear the ground of a tuft of oft-repeated nonsense. The notion that poor people are denied a university education because money goes to pay the fees of those who can afford it is silly.

Firstly, access for the poor is much more complex and deserves separate and serious thought and action.

Secondly, while there are people who can easily afford to pay fees, they are too few to make much difference and thoughts of sliding scales for the not so wealthy emphasise the point.

Thirdly, “afford” is not a simple, binary concept. There are those who might find the money but who can ill-afford to pay. Sure, “free fees” did not alter the class composition of students but it did lift a burden from many families who would otherwise strain to find the money. It is both cruel and dishonest to label these people as middle class and imply that they are whiners who are pretending that they cannot afford fees.

There is no painless “the-rich-will-pay” way to reintroduce fees. If significant money is to be raised through fees, most people will have to pay. Face this and debate the reintroduction of fees.

As the likelihood of Labour participation in government approaches certainty, old and divisive views resurface. We are back yet again to opposing coalition with liberals and conservatives. This time it is wrapped in a desire to make common cause with fringe leftists but this too has been seen before: remember the rise of the Workers Party. Let’s separate the two ( i. The question of coalition with FF or FG; and ii. the question of coalition with small leftist parties) and then finish with a proposal.

The question of coalition with FF or FG.

Yes, it is true that coalition has disappointed Irish socialists. Yes, it is true that coalition has underachieved. Yes, it is true that coalition did not significantly alter the structures of power and inequality in Ireland. BUT yes, it is also true that coalition is a tactic not a political perspective or even a programme. Two points need to be made. Firstly coalitions involving Labour have not been failures. Secondly, the extent to which they disappointed socialists may have been due to a lack of thought and imagination among socialists themselves.

The weakness of and danger to Labour in coalition has been the lack of a clear political ambition in preparing for coalition. The problem today on the left is the same as it was in the 70s/80s when Labour was tearing itself asunder over coalition: there is no coherent leftist objective. The best argument on offer is that leftist policies are more likely to restore the kind of prosperity which Ireland enjoyed before “the crisis”.

These arguments are compelling and deserve support. It is clear that familiar socialist approaches offer a better chance of recovery and have the added attraction that they give a degree of protection to the poor. The liberal arguments which stand against them are essentially daft and will not achieve the liberal goal of a prosperous society. In short, Labour retains its status as the political wing of St. Vincent DePaul and becomes the fount of Keynesian sense and decency. This is an honourable position but it is not enough.

Ok, following an extended period in which market fundamentalism became the religion of the chattering classes, it is relatively progressive to offer mildly distributive policies which will stimulate growth but – again and particularly in a time of unprecedented openness to ideas – it is not enough.

TASC’s open letter is an excellent example. It seeks to maintain and expand a functioning economy by way of avoiding cuts in public spending, and stimulating investment including public infrastructural projects. It calls for a measure of equality by way of taxing wealth and high income, and by way of fighting poverty/low income. Frankly, only a maniac would argue against this. It must be done but it is not enough for a party needing to be inspiring and unique. 

It is time to offer something imaginative, something progressive, a different social objective. This is a variation on Rosa’s view that the purpose of a socialist party is to advance the policy that no other party can: Let’s make increased equality and particularly greater equality of income the objective of all policies. In other words, unless a policy will SIGNIFICANTLY NARROW THE GAP between high and low incomes, let’s leave it to liberal or conservative parties.

Think about it. The reason for voting Labour and the price of coalition with Labour is real change: the measurable and significant flattening of income levels.

The question of coalition with small leftist parties.

There is a strange belief among some Labour members that small means socialist or at least in some sense progressive and that an alliance would somehow lead to a left of centre majority. This fantasy sits easily with a strong opposition to dealing with liberal and conservative parties and is encouraged by journalists who are essentially egalitarian but antipathetic to Labour. They are, however, aware that by far the largest bloc of progressive politics in Ireland is the Labour Party.

A basic problem is that even if there were a real meeting of minds within this group, the numbers don’t amount to anything like a majority.

There isn’t, however, a meeting of minds. Coalition with such groups is at least as daunting as with either FF or FG. The explicitly socialist groups dislike Labour and tend to cleave to doctrines and analysis which addresses earlier manifestations of capitalism than that which we now face. The media appearance of their arguments serves to deride socialism, making socialism appear silly and irrelevant. Other parties are simply not socialist or even predominantly leftist. They certainly have socialist members who have subordinated their leftist sentiments to another project, be it environmentalism or aggressive nationalism. Incidentally, the same could be said of members of the two major parties.

Radical or redundant

Forget fantasies about building a coalition of leftist splinters. Forget liberal and conservative policies and leave them to the parties to whom they belong. The sensible approach for Labour is to seek coalition NOT on the basis of anything like easily agreed policy but on the basis of policy that a liberal or conservative party could not possibly initiate.

A drive for greater equality and particularly equality of income would be popular and inspiring. In Britain even David Cameron is aware of public sentiment. He has called for a ceiling in public service pay of 20 times the lowest pay. Figures are up for debate but how about 10 times in the public sector, in companies in which the state has ownership and in companies awarded state contracts?

Leaving aside mathematical quibbles, in common speech we normally associate the middle with the average or thereabouts. However, when it comes to talking about income, the use of “middle” becomes so strange that it distorts public discussion.

Someone on, say, three times an average wage cannot sensibly claim the term “middle income”. The meaningful term is “high income” or “rich”. Those on greater multiples can be described as “very rich”, “filthy rich”, “obscenely rich” etc. etc. but NOT “middle income”.

Now, some rich people lay claim to the term “middle income” because they spend their money in a praiseworthy way (e.g. school fees, their home etc.) leaving little to spend on, say, entertainment and holidays. Such spending decisions might attract the terms, “prudent”, “sensible”, “family oriented”, but they have no bearing on categorization of income.

It was obvious from RTE’s Frontline programme last night that many have swallowed the popular storyline that Ireland’s boom was destroyed by developers and bankers. Ireland is indeed cursed with chancers and an incompetent ruling class but that’s one just part of the story. Ireland’s FF/PD/Green governments maintained the appearance of a thriving economy by stoking a building boom; it was criminal folly. However, the fact is that the flourishing export-led economy ended years ago as industry relocated to cheaper countries. Any fool driving around the country could see this as the factories closed and the furniture warehouses multiplied. On TV last night over and over again the simplistic view was aired: builders and bankers killed our lovely Celtic tiger!

It was sad to see on this programme too an ambulance driver making a case for maintaining his small income and in so doing protecting a group of people who were conspicuously absent: rich public servants. None of the private sector workers whose function in the programme was to attack fellow workers was prepared to have a go at poor public servants. Unfortunately, the word “rich” was never used; it seems to have been banished from our vocabulary. Instead both sides seemed to want to attack “administrators” so that “frontline” staff can be protected. It was a depressing sight: two sets of workers baying for the dismissal of poor office workers while the rich sat at home watching the spectacle.

There really isn’t much engagement in the debate over reducing pay in Ireland. A small part of the reason is that the protagonists retreat into their terminological camps. One side uses the value-free lexicon of competitiveness and the other side emotes with reference to a “race to the bottom” in wages.

The truth is that the boom years had two parts: an internationally competitive, largely exporting part and a property boom. The former helped fuel the latter but the former ended years ago and industry has been moving to exploit cheaper labour abroad. This movement certainly is not recent.

Let’s face facts. Ireland flourished by WINNING a race to the bottom. Holding on to the jobs necessitated staying below the competition. Other than state subvention which would not be allowed under EU rules, holding on would have meant workers accepting that their income could not rise unless international competitor wages rose first or worse accepting a decrease in line with international competition.

The Irish government wants to reduce the public pay bill by 10%, about 20Bn. Discussion about how this might be done has been limited to familiar themes. The only nod to decency has been mention of leaving the salaries of poor public workers untouched but even this has been challenged as “unfair” to poor people employed by private companies. In these strange economic times why not indulge in the luxury of radical thought?

 

If we open discussion to hitherto unthinkable possibilities, it might lead us to reconsider our values. There may be a progressive but challenging way to reduce the public pay bill. Let’s consider putting a ceiling on the income of rich public employees. This course has advantages beyond reducing the total pay bill. It makes a statement about and begins to address excessive inequality in Ireland but it will make no one poor. Moreover, the conventional argument for outlandish pay, that high earners will defect to jobs in the private sector, no longer applies. Let’s calculate. How much would be saved if no public worker received in excess of, say, E200k per annum? Perhaps the number of workers that well paid is too small to make a significant saving. Let’s then calculate for 150 and 100. Going any lower might begin to push into the terrain of radical egalitarianism but 100k is more than twice the average industrial wage and five times the minimum wage.