Alternatives – economic, social and environmental (Village Magazine, May)

The Egalitarian

Niall Crowley, equality consultant and former CEO of the Equality Authority, commissioned some alternative voices economically, socially and environmentally

We are constantly told there are no alternatives. The markets allow for no flexibility, they say. The Troika demand this, they tell us. Closing down the debate inspires a hopelessness and yet it suits the dominant and doomed economic project to get us back to where we were and to protect those interests that, supposedly, retain the capacity to get us there. It stifles public debate and locks all commentators into ways of thinking that narrow the range of solutions being considered. We need alternatives now more than ever before if we are to imagine a different and better future.

The current situation in Ireland “requires a refounding of the the institutions and culture of the Irish State, and a new development project for the country”, according to Kirby and Murphy in their book ‘Towards a Second Republic’ (Pluto Ireland, 2011). They bemoan the constraints to our social imagination. They quote Colin Hay writing about the situation in Britain: “that new economic paradigms are difficult to summon up, especially when you need them most”.

Those who are working on alternatives – alternative policies, strategies and even models for society and the economy  do not get the public space they need.


The Economist

Sinéad Pentony, Head of Policy with TASC, writes that tax determines society

Taxes provide the revenue that we need to educate our children, care for those who are ill, keep our communities safe and support those who are out of work or in retirement.  Ireland is an advanced economy, with western European standards of social and economic development.  If we wish to maintain and enhance these standards, our levels of taxation will also need to be comparable to those of our most advanced European neighbours.

In 2009, Ireland’s overall tax-to-GDP ratio was the third lowest in the European Union at 28 per cent, and the second lowest in the Eurozone.  This is compared to an EU average of 38 per cent.  The difference between Ireland and our European neighbours is primarily attributable to Ireland’s relatively low level of (employer and employee) social-security contributions, more commonly known as PRSI, and the relatively low levels of local-government taxation.

The tax base was eroded over the last two decades by a policy of cutting taxes when they should have been increased, and through the proliferation of tax breaks that undermined the tax base and fuelled the property boom.   We need a lot of painful adjustments to make up for the mistakes of the past.  TASC has been making the case for rebuilding the tax system in a way that creates the conditions for greater equality and sustainable and job-rich growth.

Government income and Government expenditure are out of line. The Government, in its first budget, has maintained the budgetary parameters set by the previous administration, prioritising spending cuts over tax increases.  TASC has proposed a different package of measures to reduce the deficit by focusing on revenue-raising measures that will minimise the impact on employment, economic growth and low-income groups.

Taxation measures that promote equality and sustainable growth must target high-income groups, property assets, unproductive activity and passive income (e.g. rent), as well as protecting the environment.   For example, this would mean that the Universal Social Charge is levied on all income from inheritances, gifts and capital gains in the same way that it is currently levied on labour income.  The thresholds determining liability to Capital Gains and Acquisitions taxes would be reduced.  While the last Budget made some progress in this regard, it did not go far enough.

Tax reliefs are generally regressive since they disproportionately benefit higher earners and property-owners.  The curtailment of pension-tax reliefs and reliefs relating to rental income would increase the tax take while minimising the impact on low-income families.  The domicile levy has failed to ensure that wealthy Irish people who are non-resident for tax purposes pay their fair share.  There is clearly a need for a radical rethink of how these wealthy elites should be taxed.  Other countries have successfully taxed their wealthy citizens through taxation based on citizenship or taxation of global assets.  The question is: do we have the political will to put in place equitable taxation measures for our wealthy citizens?

Ireland has very low levels of local taxation compared to other European countries.  TASC supports equality-proofed residential-property tax and water charges, as these measures represent an opportunity to sustainably fund reformed local services that are more accountable and responsive to local needs. Unfortunately, the flat-rate household charge is highly regressive because people on lower incomes pay proportionately far more of their income than those on higher incomes.

While there is a lack of clarity regarding how water charges will be implemented, the indications are that they will not be taking household size or circumstances into consideration, so registerig a disproportionate impact on low-income households and larger families.

Ireland also has very low levels of social-security contributions.  We should be planning for gradual increases in employer and employee PRSI, combined with general taxation, to provide free-universal healthcare and earnings-related pensions.

Minimising the impact of tax increases on low-income groups not only promotes equality and allows people to live in dignity, it also protects spending in the economy, which is crucial for economic recovery.   TASC’s taxation proposals outline in a credible way a realistic set of measures to move us away from an under-resourced, unsustainable and unfair tax system and towards a modern progressive European tax system.

The Sociologist

Mary Murphy, lecturer in Irish Politics and Society in NUI Maynooth and one of the organisers of Claiming our Future, writes that without a struggle of ideas there can be no political struggle.

In Shock Doctrine’ Naomi Klein chillingly describes the Right as always ready, waiting for moments of crisis, to move in and apply its prescriptive ideas.  While the Left also expects opportunity in crisis, progressives have been found wanting by failing to grab the moment of crisis to popularise an alternative ideology to the one that caused the crisis. Writing last year Unger, for example, noted how there appears to be a lack of capacity to imagine and articulate alternatives and a tragic narrowing of political imagination and absence of progressive political projects.

The Right and Centre simply claim there are no alternatives and successfully narrow political debate.  They are aided by the Left’s collective failure to identify and popularise meaningful alternatives. Traditional political sources of progress like social democrats are backed into narrow defensive corners from where they tend to legitimate economic consensus. Marxist inspired alternatives often lack either credibility or vision.

This is where civil society groups come in.  Civil-society movements can work to popularise normative values or ideas about the good society and to build forums in which to deliberate and negotiate those ideas.  Since 2010 Claiming our Future, for example, has attempted to create new public spheres where people can deliberate about alternatives.

Over 1000 people met in the first event in the RDS in October 2010. Many more people have subsequently come together to reflect on and re-imagine democracy, local government and participation, new approaches to localism and achieving environmental sustainability, and fostering equality through minimum and maximum incomes.

A common concern at all the events has been the Government’s ‘Plan A’, with its excessive focus on public expenditure cuts and its absence of both progressive taxation and investment in jobs and infrastructure.  A constant theme for Claiming our Future is to argue that there are plausible and credible alternatives to this ‘Plan A’ status quo. ‘Plan B’ is Claiming our Future’s alternative investment and fiscal strategy.

Part One of this ‘Plan B’ identifies potential funding sources for a strategy of national investment in public infrastructure and human capital. These sources include cash reserves held by government, the National Pension Reserve Fund, a national strategic investment bank as promised, directed investment by the bailed out banks, incentivised private-pension investment, and more effective use of the European Investment Bank.

This investment strategy can create 100,000 jobs in areas such as training and up-skilling of the long-term unemployed, environmental technology, regeneration of social housing estates, social infrastructure (primary healthcare, hospitals, school-building, water-treatment and community services), and supporting indigenous local enterprises in IT, digital communications and local-food production.

This would provide the infrastructure for a sustainable economy and society.  Evidence from the Nevin Economic Research Institute (2012) shows there would be multiple returns on the original investment in savings made through reduced social costs, economic development and environmental sustainability.

Part Two of this ‘Plan B’  requires that the fiscal strategy would be rebalanced to focus more on progressive revenue-raising and  less on public-expenditure cuts. Progressive taxation would be increased to fund high-quality public services. National fiscal policy and each specific taxation, expenditure or public sector reform decision, would be evaluated against a national goal of equality.

Increased public expenditure as described would enable needs to be met. Public sector reform would enhance efficiency, effectiveness and quality. Savings would be achieved from renegotiated promissory notes and debt rescheduling.

Just because Ireland is  poorer does not mean Ireland has  to be more unequal. People are angry and fearful but they also need hope. ‘Plan B’, Claiming our Future’s two-track approach to getting Ireland back on the road to recovery includes a realistic strategy for investment in jobs and a rebalancing of the fiscal recovery to ensure that at the end of this disaster, Ireland is not an even more unequal place than it was beforehand.


The Environmentalist

James Nix argues for economic contraction – for the environment and for wellbeing.

In administering its poison, growth will kill off the planet’s inhabitants, or at least a great many of them, particularly humans. This eventuality is undeniable – but we don’t read much about it, particularly about the complicity of economic growth in the downward ecological spiral we are bringing upon ourselves. As bad news stories go, this one seems to have crossed a line, and be just too bad to cover – at all.

In mid-February leading scientists, including Brundtland, Ehrlich, Hansen, Lovins, Lovelock, Sato, Stern, and Watson, observed that “the rapidly deteriorating biophysical situation is more than bad enough, but it is barely recognised by a global society infected by the irrational belief that physical economies can grow forever”. They warned that “The time to act is now … the adverse effects of climate change and loss of biodiversity cannot be reversed for centuries or are irreversible … the climate is warming at a rate faster than at any time during the last 10,000 years, biodiversity is being lost at an unprecedented rate, fisheries are in decline in most of the world’s oceans, air pollution is an increasing problem … and large areas of land are being degraded”.

How do we get away from growth? By contracting our economies, by extracting, producing and disposing less, by embracing a way of life that treads lighter on the earth, in short, by de-growth. The practical steps required are well summarised by Serge Latouche (Farewell to Growth, Polity Press, 2009) and other authors: reduce dependency upon capital flows, step away from productivism and embrace locally-made goods, abolish the World Trade Organisation in favour of a World Localisation Organisation, buy less, replace foreign holidays with socialising in our own communities, work less and spread it out. Latouche foresees a cultural revolution in which TV-borne consumerism is rejected in favour of local conviviality.

Latouche paints a picture of a different society, one that has moved away from “the obsession with work” and the attempt to subjugate our surroundings. We have to stop trying to dominate nature, he argues, and instead become gardeners, tending the earth. Over-work and consumerism are replaced by the pleasure of leisure and the ethos of play.

Originally, it was contended that economic growth was good, that it improved well-being. Now that the evidence points the other way – and acutely so in wealthier societies – the main assertion today is that growth is “necessary”. Without more growth the economy will collapse, so the argument goes, and so will savings, social welfare, your parents’ income, your own financial stability and so on.

The central point, however, is that the construct of growth is going to collapse anyway. The sooner it collapses, or is collapsed, the more scope there is to manage the resources that remain. So society does not have a choice between degrowth and growth. Rather, it is a choice between an orderly and planned approach to degrowth or a bit more growth in the short term, and then unplanned degrowth kicks in with a vengeance.

Giorgos Kallis (in Ecological Economics 70, 2011) suggests that it is not simply that we will have a smaller economy, but also a qualitatively different one. While Kallis acknowledges that proposals on “how to degrow” are still fragmented and diverse, he does highlight some common threads from a range of sources including Tim Jackson, James Speth and Latouche.

Work would be replaced with leisure. This would be allied to a gradual de-centralisation and re-localisation of the economy. There would be reductions in throughput. Advertising would cease. There would be more employment in sectors with human contact such as health and education, financed by redistributive taxes and pollution levies. Locally-based complementary currencies are seen as a way of strengthening local economies. Moratoria would be placed on resource extraction and new infrastructure such as motorways and certain power plants. Investment would be made in new public squares, open spaces and community gardens.

Degrowth gets no support from Governments today. It is never likely to get support from industry, at least industry as we know it. Champions will need to emerge from the socio-cultural revolution described by Latouche, a revolution that is only the first step in overhauling the political system.