Opinion

A citizens’ forum should be followed by formation of a new electoral force Déirdre de Búrca For many, politics is increasingly a discredited profession. The political parties that operate within the existing  system are seen to be part of the problem, rather than the solution to our governance crisis. The prospect of creating a new political movement represents an opportunity to realise a better, and fairer society, inspired by a renewed set of political ideals. This prospect has an immediate appeal, but it is important to acknowledge the considerable challenges likely to confront any new movement aiming to bring about fundamental political change and reform. The recent experience of the Green Party in government is a salutary lesson for any idealistic and ‘alternative’ political party aspiring to change the political system from within. The Green Party is widely seen to have been ‘de-radicalised’ since entering government and has been willing to support major policy prescriptions – particularly economic prescriptions – that conflict with its own core political values. This is best described as a form of political ‘capture’. Smaller parties appear particularly vulnerable to this phenomenon when they get power through participation in a coalition government with a larger and more dominant government partner. The recent and overwhelming crisis in our banking system presented a unique opportunity for the Green Party to promote the kind of alternative economic thinking that it has long championed in opposition.  In government, however, the party has supported responses to the banking and property crises that could just as easily have been supported by an unapologetically right- of- centre party such as the former Progressive Democrats. The Green Party has done little to stimulate public discussion, for example, about the proper role for private banking in the sustainable economy of the future. It has not availed of opportunities to popularise new and innovative models of banking, including community banking, that are being pioneered elsewhere (see www.neweconomics.org ). It has failed to insist that the basic principles of economic democracy and economic justice should inform any sustainable economic model for the future. It has co-operated with Fianna Fáil in government in providing life- support to a damaged and unsustainable economic system in order to perpetuate that system. In his new book ‘Ill Fares the Land’, the respected historian Tony Judt argues that contemporary political parties of the Left have failed to articulate a genuine alternative to the current economic paradigm. He characterises this as “the obsession with wealth creation, the cult of privatisation and the private sector, the growing disparities of rich and poor. And above all, the rhetoric that accompanies these: uncritical admiration for unfettered markets, disdain for the public sector, the delusion of endless growth” (Judt 2009). He contends that the crash of 2008 was a reminder that unregulated capitalism is its own worst enemy, and that sooner or later it must fall prey to its own excesses and turn again to the state for rescue. Judt argues that if our response to the crisis is limited to picking up the pieces and carrying on as before, we can look forward to greater upheavals in years to come. His message is stark. “It is incumbent upon us to re-conceive the role of government. If we do not, others will”. Any new political force that emerges in Ireland must have a credible economic policy-agenda that represents more than a regulated version of the model of global free-market capitalism which has failed so disastrously. This presents a significant intellectual and political challenge, given the hegemony of this model of capitalism internationally.  Ideally, we need a new political party to provide strong and effective government but deriving from the fullest possible democratic engagement of all the stakeholders in society. A well- planned, national citizen engagement and consultation process would allow members of the public to contribute to the economic and political regeneration of this country. The Citizens’ Assembly proposed by Fine Gael appears to have the potential to begin to engage citizens more actively in their own governance but its ambitions should be well beyond a talking shop. In the event that a new party or even a new political movement does not materialise in Ireland, it is not impossible that one of the existing political parties might recognise the importance of facilitating a structured national process of political and democratic renewal.  That said, a new and alternative political force is more likely to be genuinely interested in developing new forms of participatory democracy. This development is essential in order to begin to tackle the crisis of governance which is the single biggest political challenge facing our society today. Déirdre de Búrca resigned as a Green Party senator in February 2010.

Constantin Gurdgiev Weeks after the Croke Park talks about public-sector reform and Ireland’s Policy Kindergarten is still agitated by cuts in Government expenditure. The logic of arguments from the likes of Tasc, the Irish Times, and an army of Union-employed ‘economists’, is perverse: ‘In order to get the economy back on track, we need to borrow more and spend on public services and wages’. There are three basic reasons  why stimulating the Irish economy though increased public spending won’t work in current conditions – even in theory, let alone in practice. These are: the structural nature of the fiscal crisis we face, the size of the debt we face, and the lack of evidence that stimulus can work in a country like Ireland. ► Structural deficits Economists distinguish two types of deficits: cyclical and structural. The first type of deficits occurs when a temporary economic slowdown leads to an unforeseen decline in revenue and acceleration of certain components of spending (e.g. unemployment insurance and social welfare). By its definition, the cyclical deficit will be automatically corrected once the economy returns to its long-term growth path. In contrast, structural deficits arise independently of   short -term changes in economic growth. They are the outcome of unsustainable increases in permanent spending and/or declines in the long-term growth potential. In the case of Ireland, both of the latter factors are at play. Estimates of the extent of structural deficits carried out by the likes of the IMF, the OECD, the European Commission, the ESRI and independent analysts range between one half and two thirds of the 2009 General Government deficit, or 7-9.5% of GDP. Reckless expansion of Government spending in the period 2001-2007 is the greatest cause of these – not the collapse of our tax revenue. In the meantime, our economy’s long-term growth rate has declined from the debt-and-housing-fuelled 4.5% per annum to a Belgian 1.8% per annum. In 2000, the General Government Structural Balance stood at roughly -0.5% of GDP. By 2008 this has fallen to almost -11% courtesy of massive permanent staff increases in the public sector, rises in welfare rates, an explosion in health spending and creation of a gargantuan army of quangoes and supervisory organisations. Take one example. Currently, the Financial Regulator (CBFSAI) is paying on average €144,000 per annum in wage and related costs for its staff of 400 (shortly to rise to 700). Per average Irish taxpayer the cost is 88% greater than in other EU countries. Yet, CBFSAI has roughly half the responsibility or work load per employee when compared to our peers. Of course, given the body performance over the last 10 years, you might as well have cut their staff down to one receptionist with an ‘Approved’ rubber stamp and an answering machine with a ‘No Comment’ message. Forget, for a second, that most of this expenditures represented pure waste, delivering nothing more than top jobs for friends of the ruling class, plus scores of jobs for public- and quasi-public sector workers. Between 1981 and today Ireland has recorded not a single year in which the Government structural balance was positive. Windfall stamps-duty, VAT and capital -gains -tax receipts over 2001-2007 have masked this reality, as Goldman -Sachs -structured derivatives masked the reality of Greek deficits. ► We are not getting any better Over recent months, the Government has been eager to ‘talk up’ our major selling points. Ireland, it goes, is a country with stabilised public finances and a low debt-to-GDP ratio. In March, Eurostat and the bond markets exposed the lie behind the ‘stabilized public finances’ story. It turns out our Government has decided to sweep under the carpet billions of Euro it borrowed in 2009 to recapitalise Anglo. Courtesy of this, our deficit for 2009 was revised to a whopping 14.3% of GDP – topping that of Greece. But Irish General Government deficit this year is expected to come in between 11.7% and over 12% of GDP, depending on who is doing the forecasting – the Department of Finance or the ESRI. And this is before we factor in the March 2010 statement by the Minister for Finance, promising over €10 billion for the banks this year. This means that, as the rest of the world is coming out of the recession, our fiscal deficit for 2010 is expected to either match or exceed the revised level achieved in 2009. Some stabilisation. Irish Government debt is expected to reach 78-82% of GDP by the end of 2010 – on a par with the Eurozone’s second sickest economy, Portugal. With Nama and bank recapitalisations factored in, Irish taxpayers will be in a debt hole equal to between 117% and 122% of GDP by 2011 and to 137% by 2014. At the point of the Greek debt implosion last year, Greece had second highest debt to GDP ratio in the EU at 117%, after Italy with a massive 119%. In short, the current crisis-management approach by the Irish State is going to cost every Irish taxpayer in excess of €117,000 in added tax liability. Neither Iceland nor Greece comes close. ► Economy on steroids Still think that we should be stimulating this economy through more borrowing? Take a look at the private sector debts. In terms of external debt liabilities, Ireland is in a league of its own amongst the advanced economies. Our overall debts currently are in excess of the critically high liabilities of the Heavily Indebted Poor Countries (HIPCs) to which we are sending intergovernmental aid. And rising: in Q3 2009, our external debt liabilities stood at a boggling USD 2.4 trillion, up 10.8% on Q3 2007. Of these, roughly 45% accrue to the domestic economy – more than six times our annual national income. Ireland’s share of world debt is greater than that of Japan and more than double that of all BRICs (Brazil, Russia, India, China) combined, once IFSC companies are included. Over the next 5 years, the entire Irish economy will be paying out around €206,000 per

It doesn’t want economic, social and political transformation Joe Higgins A General Election must be held at the very latest in two years time. Very possibly it will take place much earlier and may be triggered by the Green Party suddenly discovering that it has an irreconcilable ‘principled’ difference with Fianna Fáil on some issue and therefore has to take the ‘selfless’ decision to walk out of government. Such cynical opportunism comes easily to the leadership of the Greens faced with the need to rehabilitate themselves with former voters dismayed by their abject capitulation to Fianna Fail. It is very likely that the Labour Party will form a coalition government with Fine Gael in the wake of that election unless the political landscape is altered far more radically by seismic movements of working people in opposition to the savaging of their living standards and public services. For this reason both of these parties must now be obliged to be very specific on the exact economic policies they would implement in government. There is a fundamental dishonesty about Labour’s approach to General Election campaigns. The party puts forward a detailed manifesto for the campaign but pointedly fails to explain to voters which elements can be conveniently dropped after an election to make possible a coalition with Fine Gael. Equally, it fails to state which elements of Fine Gael’s manifesto it may accept in a Programme for Government even if it clashes with its own. The economic crisis of Irish and European capitalism and its consequences will most likely dominate the coming election. There is a fundamental choice to be made by any political party seeking to be in power. Does it accept the basis of the present policy which is that working people, pensioners and the poor are to continue to be saddled with the consequences of the economic crimes and contradictions of a system dominated by speculators, developers and sharks in the financial markets? Or does it fundamentally challenge that system and campaign for an economic, social and political transformation – revolutionary changes in fact – to the present set up? Were the Irish Labour Party true to the ideas of its founders, including James Connolly and Jim Larkin, it would adopt the latter course. It is clear, however, that it will not, but will opt for the current policy with some cosmetic changes. The Labour leadership condemned the savage cuts in the pay of low- and middle-income public sector workers. That is easy to do. But then, treacherously,  it demanded that these workers should meekly accept the blow. Leader Éamon Gilmore criticised the limited strike action of public-sector workers last year and also the work-to-rule by members of the Civil and Public Services Union this year. He steadfastly refuses to say whether he supports the so-called Croke Park deal – claiming this would be political interference in industrial issues. This is an incredibly cynical position for the Labour Party to adopt. The party was founded, after all,  as the political arm of the Labour movement. This deal represents an abject betrayal of the trade-union leaders who were sent into the talks by their members to secure a reversal of the pay cuts, only to emerge with the cuts still in place and a whole raft of other attacks on working conditions besides. Labour is silent because the party would itself insist on such a deal if in government. In Spain, Greece and Portugal the sharks in the financial markets – international investment banks and hedge fund operators – are raking in billions from their manipulation of the current crisis. Working people are being crucified to pay for their speculation and for the crisis in general. It is so-called Socialist parties which are implementing the cuts in each of these countries – socialist parties with which the Irish Labour Party is affiliated and shares an outlook. The reality is that all the Social Democratic and Labour Parties in Europe have capitulated to the pressure of neo-liberal capitalism over the last twenty years. All embrace the market and therefore the rules of the market and the right of the financial speculators to exercise the kind of dictatorial power over economies and society that is now increasingly clear to all. The political result of all this is a Europe-wide vacuum on the Left. The genuine Left, those who seek the ending of capitalism and socialist change are therefore confronted with the task of constructing a new mass party of working people which will seriously fight for this; and that means also standing four square in active opposition to the present attacks on living standards, jobs and public services. Joe Higgins is an Irish Socialist Party politician. He was elected as a Member of the European Parliament for the Dublin constituency at the 2009 European Parliament election.