[Marxism] Economic crisis in Ireland

[D OC <donaloc@xxxxxxxxxxx>]

Interesting interview with Eugene McCartan, general secretary, CPI shame that 
he doesn't think Socialism is a demand ready to be raising. I think that given 
the scale of the challenges, it is the only acceptable way forwards.

 

He doesn't really draw all the conclusions from the fiscal crisis that he could 
do - the shortfall is so significant that it really necessitates either massive 
an unpalatable cutbacks or else the overthrow of the entire system.

 

Anyhow, of interest nonetheless...


For decades the European Commission and the establishment political parties of 
the member-states of the European Union praised the Irish model, called the 
“Celtic Tiger.” What were the most important characteristics of this model? 
The most important aspect was that the EU Commission, with the help of the 
Irish establishment, attributed the success of the Irish economy to the fact 
that it was one of the most open economies in the world. It was based upon (a) 
low corporation tax, (b) low personal tax, (c) very little or what they called 
“light” regulation, (d) a trade union movement heavily compromised by “social 
partnership,” (e) a well-educated and skilled young work force, and (f) a 
significant platform for trading into the European Union by transnational 
capital, particularly from the United States. 

Ireland knew a period of considerable economic growth above the average in 
Europe. Could you give some figures? For whom were the benefits of the economic 
growth? 
     Without a doubt, the standard of living of most people rose during the 
period called the “Celtic Tiger.” The average yearly growth was somewhere in 
the region of 6–8 per cent per annum. Much of this growth was centred on the 
construction industry. This resulted in an enormous growth in speculative 
investment in the construction industry, reaching a peak of 100,000 housing 
units being constructed in one year alone. The housing market and the 
construction industry have now collapsed, from a peak of employing 255,000 
people in 2008 to now employing a little over 150,000. Yet 44,400 people are 
now on the housing list, awaiting housing, while more than 60,000 housing units 
are still empty. 
     This led to a huge growth in house prices and the speculative price of 
development land. Young couples and individuals where taking out 100–120 per 
cent mortgages over forty years at a time of low interests rates. Low interest 
rates suited the German economy, as the Germans were trying to stimulate 
economic growth. The value of the euro is determined by the needs of the German 
economy, not necessarily by the requirements of the smaller member-states of 
the European Union. 
     When interests rates began to rise, in the main because of the needs once 
again of the German government to damp down inflation, this caused a crisis, as 
people stopped buying houses. People in Ireland are second after the United 
States for the level of personal debt. The plastic card made up the difference 
between real wages or their disposable income and the false desires or needs 
created by the brightly coloured magazines and shop windows promoting the 
unsustainable life-style of capitalism. 

How badly were the banks in Ireland hit with the financial crisis and how did 
the government respond? How much money went into the financial sector (in 
absolute figures and in relation with Ireland’s GDP)? What do you think of the 
government’s response? 
     In early October 2008 the management of Anglo-Irish Bank, which was 
heavily exposed to the speculative property market, had an emergency meeting 
with the Government about its imminent collapse. This bank had financed a lot 
of the speculative building and investment by many of the major property 
speculators, who have investments around the world. These same investors are 
the financial backbone of the major party in Government; so effectually the 
ruling class was and is in deep financial crisis. 
     Following from these, which at first were secret meetings, the Government 
proposed an across-the-board guarantee of all banks’ and financial 
institutions’ debts. Six Irish banks and financial institutions have agreed to 
avail of this protection afforded to them by the state. It is now estimated 
that bank debt exposure taken on by the Irish state is in the region of 260 per 
cent of GDP. Subsequently the Government has raided the national pension fund 
and has put €3½ billion into both Allied Irish Bank and Bank of Ireland, having 
nationalised Anglo-Irish Bank. 

How high were the profits for some Irish banks the last years? Did Ireland also 
know bankers and CEOs with huge wages that were thanked with golden handshakes, 
in Belgium also called golden parachutes? 
     Over the last decade the Irish bank system has been highly profitable, 
with year-on-year growth in profits. Allied Irish Bank made €885 million in 
profit in 2008. In relation to the salaries of bankers, Irish bankers are paid 
well above what many bankers in Europe would receive. For example, the CEO of 
the Central Bank of Ireland is paid more than his equivalent in the British or 
European Central Bank. 
     The CEO of Irish Life and Permanent resigned with a pension of €400,000 
per year. It has been discovered that the CEO of Anglo-Irish Bank had secret 
loans coming to €110 million from the bank that the Revenue Commissioners 
(state tax-collectors) and the Bank Regulator where “unaware” of. At the end of 
each financial year another financial institution, Irish Life and Permanent, 
would secretly transfer money from its account to Anglo-Irish Bank in order to 
cover up this massive gaping hole in the finance of Anglo-Irish Bank. This is 
massive potential fraud, yet no-one has been questioned by the police and 
no-one has been charged, and it is most likely that no-one will every go to 
prison. If a father or mother stole food to feed their children they would get 
six months in prison. 

For months now, the financial crisis went into a deepening general economic 
crisis. Could you give some facts and figures from company closures and 
unemployment? Other examples? 
     Ireland is experiencing not only a financial crisis but also the general 
crisis of capitalism. Since the mid-1960s the Government’s main economic 
development strategy has been to encourage investment by transnational 
corporations, to set up bases here in the Republic; a similar strategy was 
carried on in the North of Ireland by the old Unionist government and the 
British government under direct rule from London. They were and are relying 
upon transnational corporations to create an industrial base. 
     This strategy is now falling apart at a rapid rate—this year alone Dell, 
SR Technics, Google, Seagate, F. G. Wilson, Nortel, and KPMG. Unemployment has 
risen by more than 8 per cent in two years and is growing, with nearly a 
thousand jobs being lost every day. It is estimated that unemployment could 
reach 600,000 by the end of the year. The Government estimates that the general 
Government deficit this year will worsen from the forecast 9½ per cent of GDP 
that it was predicting when it produced an emergency budget in late 2008. 

Ireland is severely hit by the economic crisis. Has the nature of the “*Celtic 
Tiger” model something to do with that? 
     Yes. The Irish economy was one of the most open and deregulated in the 
capitalist world, very similar to that of the United States. It is also one of 
the most unequal societies, next to the United States, and also has the highest 
personal debt ratio after the United States. 
     Exchequer figures show a deficit of €2 billion for the first two months of 
this year. Tax receipts for the first two months were €5.76 billion, compared 
with €7.56 billion in the same period in 2007—a drop of 24 per cent. 
     VAT receipts were 17 per cent lower, at just under €2¼ billion, while 
income tax was more than 7 per cent down, at just over €2 billion. 
     The amount collected in VAT and excise duties was down by €755 million, 
compared with the first two months of last year, a decline of 21 per cent. 
     The fall in income tax results from a fall in employment, while stamp duty 
and capital taxes were off a total of €613 million, relating to the contraction 
in house sales—an investment activity. 
     Public spending rose by €131 million, as social welfare spending was up 
€188 million in the first two months as a result of higher unemployment. 

In what consists the crisis policy of the Irish government? What are the 
consequences for workers’ income, working conditions and jobs? Briefly tell us 
also the composition of the Government. What do you think of it? 
     The current Government in the Republic began as a three-party coalition 
with the support of a number of independent members of the Dáil (parliament). 
Since then the Progressive Democrats, who styled themselves on the Thatcher 
model, have collapsed, though their one minister remains on in government as 
Minister for Health. The major party in the coalition is Fianna Fail, which 
grew out of the national independence forces of the 1930s; and the final 
partner is the Green Party. 

Especially, the levy on workers’ pension was highly controversial. Could you 
explain the measure? 
     In the last budget, in 2008, the government imposed a 1 per cent levy on 
all workers’ earnings. Hospital charges increased to €100. The drug repayment 
scheme was limited to €100 per month, hospital bed charges increased to €75, 
third-level education fees increased to €1,500. 

The Communist Party of Ireland say that the budget which the government 
introduced in November showed that government wants the working people, the 
poor, the sick and pensioners to pay for the crisis? You even speak of a 
“criminal conspiracy” among the ruling elite “to make working people pay for 
the deepening crisis”? What do you mean? 
     You can gather from my answers to previous questions the close nature of 
the ruling class to this Government and how it influences its decisions. What 
is clear is that since 1987 most of the important economic decision have been 
taken or shaped by the European Union. Over the last decade of the “Celtic 
Tiger” Irish bankers have had a huge input into Government economic and social 
policies. 
     When the economy was running with massive budget surpluses it was easy to 
throw money around the place, funding projects, paying grossly inflated prices 
for infrastructural projects, to fatten the wallets of financial backers. The 
Taoiseach, Brian Cowen, speaking in the Dáil in early March, stated that the 
Government was not aware of the extent of the fiscal and economic crisis facing 
the country up until the exchequer figurers for February 2009 had been 
announced. This is the same leader who informed the nation that he had not read 
the Lisbon Treaty but that people should take his word for it and vote yes last 
June, that it was a good deal for the Irish people. 
     As the crisis has deepened it is clear that the establishment has few if 
any answers to it except to attack public spending on education and health, to 
impose levies on workers to bring in additional revenue. The most recent was 
the imposition of a 10 per cent levy on public-service workers to contribute an 
increasing amount to their pension. 

What concrete policies does the CP Ireland propose? 
     We are working on an alternative economic strategy, which should be 
completed shortly. But we have proposed—and this has been taken up by a number 
of unions—the establishing of a State Development Bank, in which the National 
Pension Fund should be invested, along with other pension funds, removing them 
from the global speculative markets. Also, the general public could move their 
savings, and also families could move their family-home mortgage. 
     We have not called for the nationalisation of the banks, as we believe 
that that is a case of the socialisation of the debts of the ruling class. The 
nationalisations that have taken place around the capitalist world are for 
strengthening capital, not for controlling or weakening it. 
     A planned use and development of our natural resources, such as marine 
resources and farming, should be developed. These valuable resources should be 
brought under democratic control and accountability. As an example, the 
Republic has nearly 30 per cent of the fishing stock of the European Union yet 
is allowed to catch less than 8 per cent of the EU catch. Meanwhile all mineral 
resources, such as natural gas, are owned by transnational corporations. 
     In addition, we have called for the establishment of a state development 
body that should set up advanced-technology industries, creating jobs using the 
creative abilities of our scientific community, along the lines of those 
developed in Cuba, thereby creating jobs that can’t be shipped to eastern 
Europe or China. 
     We recognise that there are no real short-term solutions within the 
existing economic and political structures and that there is a need for radical 
national democratic transformation. We do not believe that we are at the stage 
to be calling for socialism. The material and ideological basis for such 
advanced demands does not yet exist. 

In Dublin 120,000 persons were on the streets to protest against government. 
Who organised and participated? What were the demands and the slogans at the 
manifestation? Other facts about the manifestation? 
     The major demonstration was organised by the Irish Congress of Trade 
Unions. The Irish trade union movement is united under one union federation. 
Their slogan was “There is a better, fairer way.” They also issued a bland 
ten-point recovery plan, a reheated version of a plan produced by a Swedish 
economist that was implemented during the economic crisis in Sweden in 1993. 
     There have also been a number of other demonstrations by public-sector 
workers, Gardaí (police), taxi-drivers, and bus workers—all individual protests 
not yet reaching the position of looking at their situation in relation to the 
general crisis. 
     We need to gain control of capital. That is within our grasp, as is the 
case in relation to the many changes that are now under way in Latin America. 
The solutions proposed or advocated within the European Union we feel are 
narrowed by the economic and ideological straitjacket that so much of the left 
have taken on board in the false belief (from our viewpoint) that the European 
Union can be transformed from being an instrument deliberately constructed by 
and for monopoly capitalism. 

Another remarkable workers’ action was the occupation of the Waterford Glass 
factory. Could you tell us something about that? 
     480 workers continue to occupy their factory, Waterford Crystal, part of 
the Waterford Wedgwood Group. Waterford is a city in the south-east, and 
high-quality crystal glass has been produced there for many decades. The 
workers are attempting to secure the future of the company and prevent its 
take-over by venture capitalists. The CPI has called for its nationalisation, 
not in some knee-jerk ultra-leftist reaction but in recognition of the very 
real fact that the Waterford Crystal name is one of the top 5 per cent world 
brand names; the crystal is made from local raw materials; and there is a 
highly skilled work force. We believe that this business could be developed and 
grown, creating additional jobs. 

Also teachers’ unions demonstrated all around the country? Why? When? 
     Teachers and other education workers, pupils and parents organised a 
protest late in 2008 at the cuts in the education budget. Tens of thousands 
participated in all the cities and major towns. 

Pensioners forced a retreat of a policy of the government concerning medical 
cards. That’s a success. How did they resist the policy measure? 
     They held meetings throughout the country. They refused to allow any 
representative from the Government parties to either attend or speak at their 
rallies. One of the features was the central role played by retired trade union 
members. 
     The Government has announced that it is planning to have an emergency 
budget in April, as the public finances continue to nosedive further and it is 
clear that state pensions, along with other state benefits, such as 
unemployment benefit, will come under renewed attack. 

What are the perspectives of the movement after the manifestation? Are other 
manifestations, strikes planned? 
     The ICTU has planned another national day of action for 31 March against 
Government policies. It is also clear that leading elements within the labour 
movement would like to find some accommodation with the Government in the 
context of some new “social partnership” arrangement. After decades of social 
partnership agreements with Government and employers, significant elements of 
the unions are unable or unwilling to resist. Despite offices full of 
researchers and economic advisers, trade unions have not come forward with one 
concrete alternative. They continue to think inside the ideological box of 
contemporary bourgeois society. It is a case now that they must become either 
radical or redundant. 
     Some union leaderships, particularly representing public-sector workers, 
are very keen to get into bed with the Government in some renewed or reheated 
“social partnership” deal. If this happens, then trade unions would, in the 
minds of many workers, become identified with current and future Government 
policies, in other words overseeing and being associated with a massive assault 
on the social gains that Irish workers and their unions have struggled long and 
hard for over many generations. 
     “Towards 2016” is the current social partnership agreement and was 
ratified by the trade unions on 5 September 2006. Unlike its predecessors, it 
is a ten-year agreement, with an initial 27-month pay phase. 
     In relation to pay, a deal worth 10 per cent over the initial twenty-seven 
months was agreed. This was be structured as follows: 
• 3 per cent over 6 months; 
• 2 per cent over 9 months; 
• 2½ per cent over 6 months; 
• 2½ per cent over 6 months. 
     For low-paid workers (those on €10.25 per hour or below) there was an 
additional 0.5 per cent payable in phase 2. 
     Employers are now reneging wholesale on this agreement, and those 
employers who have paid it because they are profitable have come under attack 
from the employers’ organisations for paying what they had agreed in the first 
place. What is happening is that many employers are seizing the opportunity of 
the crisis to launch sustained attacks on workers’ terms and conditions, with 
up to 30 per cent cuts in wages now being demanded. 
     In these conditions it would be complete suicide for the trade union 
movement to move closer and be identified with Government policy. 

What’s your opinion on the political parties participating in the workers’ 
movement? 
     None of the major political parties represented in the Dáil have come 
forward with any radical proposals to advance the workers’ movement. All 
operate within the same framework, all seeking to take electoral advantage in 
the forthcoming EU and local government elections in June. All see solutions 
within the narrow restraints that current EU treaties impose on member-states 
in relation to economic and social policies. 
     Clearly they are all attempting to steer dissent into purely parliamentary 
channels. The contradictions both of the Irish ruling class at the national 
level and the crisis at the global level are growing and deepening. While the 
material conditions or the objective conditions appear to be pregnant with the 
possibility of change, the subjective factor—that is, the understanding of 
working people in relation to the nature of the crisis and the forces 
responsible—has not yet reached the point where the ideology of the ruling 
class becomes less of an influence over the thinking and understanding of the 
masses. 





_________________________________________________________________
Get 30 Free Emoticons for your Windows Live Messenger
http://www.livemessenger-emoticons.com/funfamily/en-ie/
________________________________________________
YOU MUST clip all extraneous text when replying to a message.
Send list submissions to: Marxism@xxxxxxxxxxxxxxxxxxx
Set your options at: 
http://lists.econ.utah.edu/mailman/options/marxism/archive%40archives.econ.utah.edu