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Ireland's political and cultural magazine
— April – May 2013
politics
A
REPORT for the European Commission
in early April suggested that the last
two Irish budgets have been mar-
ginally regressive ie favouring the
better-off over the worse-off, and noted there
had been a sharp increase in inequality since the
economic crisis began.
Ireland assumed the Presidency of the
Council of the European Union at the start of this
year and will hold the position until July. Ireland’s
Presidency Programme picks a gamut of “fights”.
These included: the fight against poverty, the fight
against hunger, and the fight against tax evasion
and tax fraud. ‘Fight’ is a strong, emotive word –
is there any substance to these call-outs?
In the ‘fight against poverty’, the Programme
makes reference to the EU Strategy, which
aims to lift million people out of the risk of pov-
erty or social exclusion by . Hypocritically,
no mention is made of the fact that, last year,
the Irish government reduced its own target
from eliminating consistent poverty by ,
to reducing consistent poverty to % by .
The European Anti-Poverty Network expressed
alarm at this reduction and in its key message
on the overall target said: “Austerity policies are
generating poverty and undermining an inclusive
recovery” in Ireland. Far from reducing poverty,
European and Irish policy, through austerity, is
concentrating wealth and thereby increasing pov-
erty. Ireland, at the helm of the EU, is presiding
over poverty.
The EU, which often touts its own role in inter-
national development, need not look beyond its
own borders to see widespread poverty. % of
the EU population is at risk of poverty or social
exclusion, approximately million people, up
from % the previous year. At %, Ireland
has the highest rate of children at risk in Western
Europe and the fifth highest of the EU. The
Irish League of Credit Unions’ ‘What’s Left’ sur-
veys are important indicators in the Irish media
and have been “noted” by the Troika. The latest
of these, based on December , showed that
% of people have less than € left at the
end of the month once essential bills are paid,
% have less than € and % have nothing
at all. Another survey showed that % of Irish
homes have been forced into debt to pay house-
hold bills.
The CSO’s Survey on Income and Living
Conditions demonstrates that almost one quarter
of the population, over one million people, expe-
rienced two or more types of deprivation in .
These types of deprivation include: being unable
to afford to replace any worn-out items of fur-
niture, being without heating at some stage in
the last year, and being unable to afford a roast
once a week. This poverty has manifested itself in
hunger, with % of the population or ,
people in food poverty.
Despite these levels of hunger and poverty, we
remain a very wealthy society; but this wealth
is concentrated in very few hands. According
to the CSO and Credit Suisse, the total wealth in
Ireland is € billion, around half of which is
financial wealth. Half of this is concentrated in
the hands of the richest %; however the true
The Poverty Presidency
At home and abroad, Ireland is mediocre on equality and useless on poverty
richard manton
CHArT 1: WEALTH DISTrIBUTION IN IrELAND (2011)
CHArT 2: INCOME DISTrIBUTION IN IrELAND (2011)
extent of accumulation is seen by looking at the
top %. The richest % (, adults) hold a
startling €. billion or % of all wealth in
Ireland. This is the same amount as is owned by
the poorest % - . million adults! The poor-
est %, who between them own €. billion,
barely register in Chart . The richest indi-
viduals in Ireland own €bn, almost as much
as the entire bailout package.
Furthermore, the top % of earners (,
people) earn € billion a year after tax
between them, or % of all income earned. The
top % of earners make % of all income after
tax (diagram below). The application of auster-
ity in the last five budgets, far from closing these
gaps or protecting the vulnerable, has actually
seen the rich get richer. According to the CSO,
between and the disposable house-
hold income of each of the ten deciles (%) fell,
except that of the top decile, the richest %
- which increased. In the year following two aus-
terity budgets, the poorest % of people got
% poorer while the richest % got % richer.
This effect was acknowledged by the European
Commission last year: “Italy recorded a particu-
larly sharp rise in financial distress followed by
Greece, Ireland, Cyprus, Portugal and Spain, with
the upper quartile seeing the greatest impact of
the rise in all except Cyprus and Ireland where
the lower quartiles bore the brunt”.
It is in this context that at least € billion
(equivalent to % of annual GDP) of private
banking debt has been taken on by the Irish state.
According to Michael Taft – an economist work-
ing for the Union, Unite, Ireland has borne the
brunt of European banking debt: % of the total
cost of the European banking crisis. The appli-
cation of austerity in Ireland cannot therefore
be cleanly separated from the private banking
crisis. The socialisation and subsequent repay-
ment of these private banking debts has been a
transfer of wealth from across Irish society to
investors in major international banks (the bond-
holders), from the side of labour to the side of
capital, from poor to rich. Such a transfer (par-
ticularly in the context of austerity) is making the
crisis worse as it reduces aggregate demand, ie
consumer spending. Nobel Prize-winning econ-
omist, Joseph Stiglitz, describes this process as
follows: “In effect, we have been transferring
money from the poor to the rich, from people
who would spend the money to people who do
not need to spend the money, and the result of
that is weaker aggregate demand”.
This process is epitomised in the recent prom-
issory notes ‘deal’. Anglo Irish Bank’s private debts
(ratcheted from failed property speculators) were
guaranteed by the State in September .
The bank was nationalised in January and
together with INBS was renamed the Irish Bank
Resolution Corporation (IBRC) in July . A
promissory note worth € billion was created
by the State to allow Anglo to receive funding
from the Central Bank, indirectly from the ECB.
The recent liquidation of IBRC and conversion
of the promissory notes to - year govern-
ment bonds not only does not represent a ‘good
deal’, it completes the transfer of private bank-
ing debt to sovereign debt liable to be paid by the
Irish public. According to Professor Terrence
McDonough of NUI Galway, the deal represents
little to no saving, will not reduce austerity, and
is really a “scam”. The deal is also an intergen-
erational transfer: now, not only are the public
forced to shoulder a debt not of their own mak-
ing, our children will continue to pay. A child born
on the night of the bank guarantee will be at least
years old before he or she will have repaid all
of Anglo’s debts.
Gene Kerrigan’s recent book asks ‘Who profits
from Ireland’s austerity?’. The answer: bank-
ing debts are owed to the major international
investment banks including Goldman Sachs,
who between then manage tens of trillions in
assets. Nobel Prize-winning economist, Paul
Krugman, has described austerity as: “an unethi-
cal experimentation on human beings going on
across the world right now”. Austerity and the
socialisation of private banking debt are mak-
ing Ireland more unequal. In the book The Spirit
Level: Why More Equal Societies Almost Always
Do Better, Professors Wilkinson and Pickett show
that income inequalities in societies are directly
correlated with health and social problems.
New Scientist magazine, in a similarly scientific
approach, finds:
“The policy implications seem obvious, if polit-
ically contentious: a more even distribution of
wealth would improve health on national and glo-
bal scales. [...] a clearer picture is emerging of
inequality and its relation to health, self-worth
and the ability to participate in society and to take
control of one’s life”.
More unequal countries tend to have lower life
expectancy, higher rates of obesity and higher
rates of homicide. In particular, inequality has
been shown to cause crime, as Wilkinson and
Pickett put it: “inequality is structural violence”.
Globally, around one billion people are going
hungry, yet there is extreme fortune too. Another
“fight” picked by the Irish Presidency Programme
is the “fight against tax fraud and tax evasion”.
There is at least € trillion hidden in secret tax
havens, yet nothing substantial has been done to
reign in some of this wealth. Oxfam, in a report
released in February, showed that the income
of the world’s richest people in was
enough to end poverty four times over. According
to the report: “The richest percent has increased
its income by percent in the last years with
the financial crisis accelerating rather than slow-
ing the process” and “consolidation of so much
wealth and capital in so few hands is inefficient
because it depresses demand”. The report pro-
poses free public services, progressive taxation
and closing tax havens to return inequality to
levels. However, the report draws short of
questioning the system that has produced such
concentration of wealth, inequality, poverty and
hunger. The burden of the economic crisis could
be eased by increasing income tax on high earn-
ers and introducing a wealth tax (see paragraph
), but the prevalence of poverty and hunger in
society is a product of the profit-driven society
in which we live.
Marx in his tome on capitalism, ‘Capital’, shows
that the accumulation of capital, ie wealth, is
systemic as it is a consequence of the need for
individual capitalists constantly to reinvest their
profits to stay competitive. However, such accu-
mulation reaches a point at which investments fail
to return a profit - overaccumulation - and causes
an economic crisis. No growth in the economy
equals no accumulation of profit from increased
production and, therefore, a need for capitalist
accumulation to reorient towards workers and
the poor. Put simply: in times of crisis, when the
pie stays the same size or shrinks, the rich will
only get more pie on the basis of the poor getting
less pie. Marx describes the “intimate connec-
tion between the pangs of hunger of the most
industrious layers of the working class, and the
extravagant consumption, coarse or refined, of
the rich, for which capitalist accumulation is the
basis”.
Increasing poverty in Irish society flows
from the success of the rich in maintaining (or
extending) their bloated standard of living. The
European Union can say what it likes in policy
documents; however, if austerity continues, pov-
erty will thrive; and as long as we live in a society
based on profit, poverty will be an inherent part
of society.
Richard Manton is a PhD student at NUI Galway and
journalist with Youth Media and the Irish Presidency,
a Youth in Action initiative run by European
Movement Ireland.
61% of people have less than
€100 left at the end of the
month once essential bills
are paid, 36% have less than
€50 and 20% have nothing
at all
