‘TIS THE SEASON of kite-flying. Before introducing its budget, the government engages in ‘political proofing’ to check if its more drastic measures do not provoke resistance.
Sometimes it holds informal consultations with social partners or lobby groups who have acquired a position on the inside track. These can give feedback on what can be ‘sold’ to members and supporters.
Another technique is to manufacture debates on new ways of shrinking state spending. Should we keep universal benefits, or should the high earner in Dalkey or Michael O’Leary see their children’s allowance stopped? The great thing about framing debate is that you get to set the parameters so that other more interesting issues are excluded.
When some left-winger, for example, suggests that we should retain universal benefits – as means testing brings huge administrative costs – but that we should tax the wealthy, they are told they are ‘off the point’. Meanwhile, a wedge is created to normalise the unthinkable – that the childrens’ allowances can be cut because it is no longer a social right.
The government also briefs selected political correspondents with ‘bad news’ to reduce expectations and even increase fears before the budget. Then, when the actual budget is delivered, it appears to be ‘not so bad’ as was originally thought.
All of these techniques have been in play for the past few weeks but the fog of political manoeuvring cannot disguise the fact that this government is continuing the insane policy of imposing ever more austerity in the midst of the worst recession since the 1930s. Don’t take my word for it about insanity. Here is Joseph Stiglitz describing his discontent with similar IMF policies which were imposed on the Asian Tigers during their crash in 1998:
Not for sixty years have respectable economists believed that an economy going into recession should have a balanced budget.
Before the neo-liberal take-over of their discipline, most economists thought that governments should stimulate demand in the recession in order to get the engine of investment going again.
But now the same ‘respectable economists’ line up in the media to support the government in promoting austerity. Unfortunately, their change of fashion does not add to accuracy in prediction as they consistently get it wrong. Here, for example, is the ESRI professor, John Fitzgerald writing in February 2009 on ‘How Ireland Can stage and Economic Recovery’:
If cuts in public sector pay rates mirrored cuts in private sector wage rates there would be a very significant gain in competitiveness, with a consequent big reduction in employment after three or four years.
Well, the three years are up and it is time to test the theory. There are 435,200 people signing on at labour exchanges and youth unemployment has reached a staggering 30 per cent. The message that ‘short term’ pain would lead us all back to ‘long term gain’ has turned out to be a cruel illusion. Worse, the austerity policies are primarily directed at low, middle income earners and social welfare recipients.
Any suggestion of a wealth tax has been ruled out because patriotic entrepreneurs would apparently flee the country. Proposals to establish an 12.5 effective rate of corporation tax or even increase it marginally is branded as ‘off the wall’ by politicians who were warned in the Nyberg report on the banking collapse against ‘group think’. And even the ever so modest proposal of the EU Commission for 0.01 tax on transactions in currencies and bonds has been ruled out – even though it would raise €500 million annually.
The distinct class bias in austerity means that the people who are most likely to spend their income within the economy are being hit hardest while those who extract money to invest in speculative activity abroad get off easier. Whatever happens on December 5, it will be another chapter in the inane policies that is leading this country to ruin.
Kieran Allen is a Senior Lecturer in Sociology in University College Dublin. He is the author of Ireland’s Economic Crash (Dublin: Liffey Press 2009)
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