On the same day the Irish government announced a further rescue package of €35 billion for Anglo Irish Bank, finance minister, Brian Lenihan, declared that the projected budget cuts of €3 billion will have to be increased….
On the same day that the Irish government announced a further rescue package of €35 billion for Anglo Irish Bank, finance minister, Brian Lenihan, declared that the projected cuts of €3 billion in the December budget will have to be increased substantially.
That means even more savage attacks on the living standards of working people, pensioners and the unemployed.
Neo-liberal policies have failed to solve the deep-rooted problems of the Irish economy and the urgent need for a socialist alternative.
As a result of the Anglo bailout and the bailouts of the other major banks a leading economist has estimated that government debt will rise to 140% of overall economic output (GNP) by 2012. Comparisons are increasingly being made with Iceland and Greece as the pressures mount on the financial markets.
Some economists and commentators have begun to talk about a ’double-dip’ recession for Ireland. If anything, this represents a favourable slant on the figures, where in the second quarter of 2010, GDP contracted by 1.2% and GNP contracted by 0.3%. A double-dip implies some economic growth.
In fact, while minor growth was registered in the first quarter of 2010, it now appears to have been a blip and the latest figures, in reality, represent a continuation of the weakening of the Irish economy.
The figures again confirm the point that socialists have made – the government’s neoliberal policies are having a negative effect on economic growth and are contributing to a downward deflationary spiral. Personal consumption, for example, has fallen by 1.6% compared to a year ago.
If the state becomes insolvent, as is now a real short-term possibility, the International Monetary Fund (IMF) and European Union could step in to provide emergency funding as they did in Greece. Such funding comes with massive strings attached. These strings would involve the implementation of harsh neoliberal measures along the lines of the ’structural adjustment programmes’ applied in Latin American countries. The wholesale privatisation of remaining state-owned companies would be demanded, together with deeper cuts in public services and harsher attacks on public sector workers and workers’ rights generally.
Despite public proclamations that all is well, the key figures in the economic and political establishment in Ireland are aware of the growing difficulties they face. An intensification of the neoliberal policies that resulted in this situation is likely, regardless of which establishment parties are in power at the time of the next budget.
Clearly the idea that ’the worst is over’ and that we have taken the necessary bad medicine was a lie – and in fact many further assaults will be proposed.
One assault will be an attempt to sell off valuable state assets like Bord Gáis (gas board) in order to both quickly raise funds and gain the confidence of the international markets through demonstrating a neoliberal approach.
Another will be a further attack on vital public services – with more cutbacks in funding to healthcare, education and social welfare. Public sector workers are again likely to come under attack.
Right-wing economic policies have resulted in a disastrous economic situation where insolvency is a real prospect. Those responsible, the bond markets, must be tackled head on. Their rule and power must be rejected and policies implemented that are in the interests of the majority rather than a small number of rich bond holders.
Contrary to the idea that ’there is no alternative’ which is promoted by the government and media, there is a realistic alternative. The reason we don’t hear about it is that it involves challenging the rule of profit in Irish society and taking wealth out of the hands of the minority who currently control it.
What that means is that the banks and hedge funds who have invested in Anglo Irish, regardless of whether they invested before or after the guarantee on bank deposits was granted in September 2008, should take their losses.
More generally, if the state is faced with bankruptcy, bondholders should be ’burnt’, with the government refusing to pay its debt to international speculators and hedge funds, rather than making working people pay.
Instead of implementing further cuts that deepen the downward economic spiral, the cuts should be reversed and policies should be implemented to get people back to work and develop sustainable economic growth. A massive public infrastructural programme could provide work for the 100,000 builders currently on the dole. A cut in the working week to 35 hours, with no loss of pay, would create 165,000 jobs by sharing out the work.
A wealth tax on the €75 billion made by the top 1% of society during the ’Celtic Tiger’ years would generate significant funds. Instead of selling off valuable state assets in order to raise short-term funds, the banks and the key sectors in the economy, including the natural resources like the Corrib gas and oil field, should be nationalised under democratic workers’ control and management, with compensation only on the basis of proven need.
In that way, credit could be provided to small businesses and, where people face difficulty in paying mortgages, the principals and interest rates on mortgages could be renegotiated and an economic plan could be democratically constructed to engender a sustainable recovery.
It would also be necessary to introduce full government control of all incoming and outgoing foreign trade. This would allow a democratically elected government and the working class, not the market, to control imports and exports – including capital.
In the short to medium term, these policies would avoid bankruptcy and avoid the state having to go onto the international markets to borrow. However, it is not possible to build a self-sufficient economy in Ireland alone. That is why implicit in the eurozone crisis is the need for a European-wide struggle. That struggle is a common struggle against the austerity measures and the rule of the financial markets, the IMF and the EU.
In addition, it must be a struggle for a socialist federation of Europe, where policies based on democratic planning of the economies of Europe for people’s needs would mean that cooperation and assistance, including funding where necessary, could be provided for different countries on a cooperative basis.