The Emerging Progressive Consensus

The following is a speech I delivered at a public meeting in Dublin hosted by the Communist Party.

The fundamental division in the economic debate is between those who support austerity and those who support an expansionary strategy.

On the one side we have those who believe that deflating growth, wages and living standards is the pathway to recovery and fiscal stability. On the other side, there are those who believe that expanding growth, job creation and incomes is the way forward.

This is the economic dividing line – austerity versus expansion. The task for progressives is to make this economic dividing line the political dividing line as well.

There is now an emerging progressive consensus among civil and social organisations. This is both a source of encouragement and frustration.

What is encouraging is that groups such as ICTU, Community Platform, TASC, the principles resulting from the Claiming Our Future conference and other groups (the list is long) have all produced reports and submissions in the run-up to the budget that agree on the fundamentals. There are four areas in which there is a consensus:

First, there must be a multi-annual, multi-billion public investment programme

Second, there must be an end to austerity and opposition to cuts in the overall level of current spending

Third, fiscal adjustments – apart from public investment – must be driven through taxation, specifically on high-income, high-wealth groups.

Fourth, the state must not be bound to honour private banking debt – not one cent

There is also a fifth area, though this was only developed following the budget: a rejection of the IMF/EU agreement reached with the current Government and a demand that whatever comes out of the future mix:

• The state shall separate bank debt from state debt, leaving private investors to shoulder the burden of the former

• Our savings and borrowings – in the Pension Fund and NTMA cash balances – must be ring-fenced for a substantial investment programme

• That there be a new emergency budget, to reverse the deflationary spending cuts of the current budget and to launch the economy on a growth pact.

In regards the latter, it must be stressed: if a new government comes into office within the next few months, whatever they keep from the Fianna Fail/Green budget, they own.

It is also encouraging that a number of economists and analysts have been developing a new macro-economic model to show that a strategy based on these principles will result in higher growth, higher job creation and more effective deficit reduction. It is hoped that this will be launched early next year.

So we have the principles, the model and the numbers – that’s the encouraging part. But nonetheless, it can get frustrating.

Why is it so difficult to get social organisations, who agree with each other on the economic fundamentals, together in the same room?

Why is it so difficult to get these groups to agree together what they agree to separately?

Why is it so difficult to get groups that agree with each other to campaign together?

Whatever the answers to those questions might be, they are no longer good enough. We can only succeed if we work together.

The foundation for a united campaign is already laid. These groups should now come together and promote the principles they agree on: investment, taxation on high income groups, no to austerity and spending cuts, a separation of bank and state debt and a rejection of the terms of the IMF/EU bail-out and the budget that resulted from those terms.

On the basis of such a joint campaign, we should bring people into participation. Why can’t we drop a card in every household, not only outlining these principles but providing voters with questions they can ask the candidates who knock on the door or speak at a local meeting? Questions such as:

• Do you support taxing high-income groups instead of targeting low-average income earners?

• Do you oppose spending cuts?

• Do you support repudiating private banking debt?

• Will you reverse the decision to cut the minimum wage?

And just as ICTU has rightly announced that it will name and shame all the TDs who voted for the cuts in the minimum wage, this new grouping could name and shame all the candidates who support austerity.

The purpose of this campaign would be two-fold:

First, to ensure that the divide in the upcoming general reflection reflects the divide over economic policy. If the upcoming debate is confined to two positions – extreme austerity or austerity with a human face - then it will not only be dismal debate, it will ensure that no alternative to current policy will be presented to the Irish people.

Second, to ensure the election of the largest possible bloc of TDs who support growth strategies and reject deflationary policies. If we are successful in our campaign, then that bloc of progressive TDs could become the largest bloc in the Dail and be able to drive the policy of the next Government.

But to achieve this outcome there must be a beginning – someone has to pick up the phone, someone has to start organising these progressive groups on to a unified platform. In short, someone or some group has to show leadership.

If this were done, we could surprise ourselves – we already agree on the fundamentals, all the groups have a campaigning ethos, and clearly there is a large appetite among working men and women for a change from the current policies.

Put all this together and we have a chance of winning.

But we will only win if we do it together.

Now is never too late.

Comments

[Helena Sheehan]

Right on for left unity.

[Mark C]

Excellent rallying cry. I'm going to repost this on contact.ie.

[Colum McCaffery]

Michael,
I tend to agree but ...
Well, I criticised TASC in the past for being overly Keynesian in arguing for investment to return us to "normal" rather than seeking change.

I'm not an economist and I struggle to distinguish between leftist argument which simply seeks to create crisis and leftist argument which is feasible in itself.

You and I crossed swords before when I sought to define "rich" as much lower than is generally accepted. My problem is that unless "rich" is defined realistically low, then "taxing the rich", becomes no more than a slogan for agitation, which can't work in practical terms because too few people fall into the rich category. Most rich people define themselves as "middle income" and this abuse of language tends to pass in media without comment. Indeed many rich people will agree with your proposals because they genuinely think you are not talking about them but some category of even richer people!

[Mark C]

I define "rich" as anyone who is earning in excess of €100,000. That's almost 3 times the average industrial wage.

Michael, why don't you start picking up the phone and calling the necessary (left-wing) people to get the ball rolling here? You're perfectly placed to do it.

[Jim Monaghan]

With a SF/Labour fron absed on these demands it could work. I feel that Labour is losing inn the polls because people feel that it accepts TINA (there is no alternative). Rory Quinn explicitely said this.
My wish a SF/Labour gov. with backbone based on what Taft suggested esp. let the bondholders burn. Plus a strong showing by te United Ledt Alliance so that the Quinns and Adams have a left opposition to worry about and keep them on a left agenda

[Colum McCaffery]

Mark, I too usually put the figure at €100k but that's only to keep the screaming at a tolerable level; I could be persuaded to go lower. However, usually when I argue along these lines, I meet with strong resistance.I understand that a mere 5% of people are in this bracket. Now, if "make the rich pay" is to move beyond a slogan, it'll have to be make those above, say, €80k pay and if my (limited) experience is anything to go by, it will be wildly unpopular.

[Tomaltach]

Jim Monaghan,
I think the reason Labour dropped is not that they accept TINA (because FG rose and they are more committed to the FF template). The reason Labour fell is that their alternative plan published a few weeks ago was so weak : it was lacking in detail, and avoiding the hard choices. It looked amateurish compared with FG's much more fleshed out proposals which also spelled out plans for a full four years in some detail. In short, Labour stuck to Gilmore's approach: avoid committement, be wishy washy and hope to make enough populist soundings to rake in the middle voter. It backfired.

The other thing is this: no one believes Labour can substantially alter the shape of the 4/5 year correction required.

Regarding 'make the rich pay', Labour's third tax rate seems fair to me and I'm sure would have widespread support, but two features of this have to be recognised: a) because so few people earn over 100k this tax will make only a small contribution to fiscal correction. Labour estimates a few hundred million. And b) it's not like those on high incomes pay little tax: they do, and we always hear about the top decile who pay over half of all income tax. The real issue is to tackle exemptions and ways out of paying tax, in fairness, many of these are already being addressed by FF (belatedly of course).

In short, this issue about making the rich pay is great for headlines but is not where the bulk of the solution to our huge fiscal deficit lies.

[Niall]

There is clearly a 55%/45% split developing within the Irish political system. FF & FG and their gene pool independents have the support of approx. 55% with the Labour Party & Sinn Féin together with the Trot ultra left having the support of approx. 45%.

It is clear also that the Labour Party & Sinn Féin are not going to grow or develop without opening up to attract a much wider group of people, who traditionally vote for FG & FF.

Higher rates of Income Tax on salaried workers will not work. Indeed with the Social Charge the marginal tax rate is now 48%. The marginal deduction rate for Higher Paid Public Servants is now over 68%.

The approach taken by Joan Burton and the Labour Party, belatedly copied in part by the current Govt. in withdrawing tax based capital allowance schemes has been far more effective in making high earners pay more tax.

Reducing the ability to claim relief by way of a minimum effective rate has also been very effective. Though many of those ideas were rubbished by Frank Daly when he was Chairman of the Revenue Commissioners. He has subsequently been well looked after by his friends in FF.

Additional taxation can only come from removing further shelters on capital and not incomes. No self respecting business owner will currently declare more income than is completely necessary, preferring to keep capital sheltered.

The work done by TASC, Joan Burton and others, but particularly by Joan Burton at the Finance Committee have influenced policy development.

Sinn Féin have also never fully explained why they supported the Bank Guarantee in Sept. 2008. That guarantee was, in my opinion our death warrant. However I am led to believe that their deputies have never fully explained their actions to the Árd Chomhairle either!

Does anyone in their right mind believe that a Govt. dependent on the support of the SWP and friends would last very long?

Let us therefore develop strategies to attract those salaried employees who continue to vote for FG & FF by showing them that the Left can produce policies that will ensure their employment and work for their children. Empty slogans for National Strikes do not bring those employed in well paid employment, but with all of the normal worries that the rest of us have any closer to the fold.