A Good Start to the New Year

Ever since the crisis began, progressives have been on the back-foot, forced to react to the agenda driven by the orthodoxy.  However, 2012 has started on a more hopeful note.  There have been two initiatives that can provide the basis for a common-sense counter-agenda, not only capable of winning considerable support throughout society but – and this is always key – of winning. 

First, is the letter signed by 60 social activists, academics and artists in the Irish Times today.  They call on the Government to introduce an emergency budget to reverse current austerity policies and introduce measures to grow the economy through an investment programme that can create jobs while increasing taxation on high income groups and re-investing the revenue back into domestic demand. 

Not only is this call for an emergency budget grounded in the reality of the Irish economy (in 2012 we will still remain mired in recession with employment falling and debt rising), it is also lays out an achievable goal.  The emergency budget, similar to the Jobs Initiative last year, is something the Irish Government can do within the parameters of the EU-IMF bail-out deal, namely:

• Releasing money the Government already has (in cash and assets) for investment projects that can create jobs; this money doesn’t have to be borrowed or found out of new taxation or spending cut measures.

• Increasing taxation on high income groups (their income, capital and/or property) has a minimal impact on domestic demand but using the revenue to put back into public services and starting to reverse some of the social protection cuts – that, too, will increase employment and demand, and, so start to remove deflationary pressures in the economy.

Would this solve our economic problems?  No.  But it would start moving us in a different direction.  And if a little bit of investment and expansion starts helping, then a lot more would bring even greater benefit and start to fundamentally change the agenda.

The second initiative was launched on Wednesday – Anglo, Not Our Debt – by social organisations comprising trade union, community, faith-based, global justice, environmental and academic sectors.  They are calling on the Government to suspend payments of the Anglo-Irish/INBS promissory note and invite the ECB into negotiations with the intent of achieving a 100 percent write-down of the debt.

We all know that repayment of the Anglo debt will inflict a terrible burden on the economy and society for years to come.  It is estimated to cost over €80 billion over the next 20 years – paying off the debts of a dead bank.   

The call for suspension and renegotiation is forensic and well-targeted.  It is not about ‘burning the bondholders’ or repudiation or default, not that I have any problems in principle with any of these.  But what it does do is avoid the accusations that are constantly thrown back at those campaigning for debt justice.

• It doesn’t create a credit event, spreading contagion throughout the European financial system.  The promissory note payment is between public agencies.

• It does not collapse the merged Anglo/INBS bank; the promissory note is maintained on their asset sheets.

• It does not demand the Irish Government act in a unilateral manner – the act of suspension is an instrument to force a multi-lateral solution; one that is satisfactory to all parties.

It is a demand for something the Government can do, if it has the political will. It would strengthen their hand -if a party continues making a payment, what's the incenvtive for the other party to negotiate?  And if the Government did this they would have the support of everyone in the country. 

So here we have two achievable and realistic initiatives capable of winning widespread support, two initiatives that can actually be realised:

• An emergency budget to invest, create jobs and raise domestic demand

• Suspension of the Anglo-Irish promissory note in order to renegotiate this odious debt

Now let’s go out and make these a reality.

Comments

[Ciaran]

Great letter - well done to all involved. It certainly makes a pleasant change from the rubbish being published on the Times letters pages recently (in relation to the economy, that is).

Your proposals are a great start in terms of a solution to our problem. However, I think the best chance we have of making a long-term improvement to the economy is to lobby for a shake-up in the personnel in situ at the ECB. They are balanced budget freaks with an obsessive fear of hyperinflation. They hand tonnes of money to financial institutions for virtually no consideration. But they won't countenance similar funding to eurozone nations, as this is apparently 'inflationary', unless funnelled through the IMF, and stapled to a list of austerity demands. They are the issuers of the currency, and they could solve the entire crisis at the stroke of a keyboard, and more or less deal the bond markets out of the equation.

Also, incidentally, prepare for a series of ad hominem attacks on the signatories in the upcoming letters pages of the Times. Or in Stephen Collins's next warning to Irish Times readers not to listen to extremists (i.e., people who think that austerity should be abandoned as a policy).

[Kieran Sullivan]

That the letter was published at all is encouraging. Maybe even the 'possessor' classes are starting to realise that the current crisis won't be solved by austerity and emigration.

[tellsitlikeitis]

Only in Ireland would an officially tax-exempt caste have the temerity to suggest the government increase income tax.

A suggestion for the smug artist-signatories to this letter ... start by paying more than 0% tax on your own income before putting your hand in the pockets of actual tax payers.

[CMK]

Ciarán, the Irish Times' letters pages since this piece was first published have proved, amply, your prediction about ad hominem attacks on the signatories.

[cormac]

and no mention of their attack on taxpayers who get up and 6am every morning to try and keep their businesses alive and the people they employ in a job. - Just more left wing pressure drivel from a bunch of sociologists who now all have degrees in economics. Of course we have to have a balanced budget. That is the basis of everything. You guys live in some civic society fantasy land.

Look get this into your heads. Capital is mobile - very mobile. Property and assets are the product of capital. Capital is what creates the jobs. Nothing else unless you want the state to employ 100,000 people to go out and fix septic tanks.!! It's a very simple equation. If you tax or expropriate assets which is in effect what you are suggesting - you will move capital out of this country so quick it will make your head spin. You are in effect being very disingenuous to the people you represent because if you think this is bad the consequences of the policy choices you are advocating will send this country back to the dark ages. You really all have your head in the clouds..

[Ciaran]

Hi Cormac,

If you think a Government running a balanced budget is "the basis of everything", then I'm afraid that you're the one living in a "fantasy land".

Income = Spending

Public Saving = Private Dis-saving.

Small business owners and employers (to whom I presume you refer) would be better served by their own unions (ISME and the like) expressing solidarity with the poor in Ireland, and demand that the State employ more people for infrastructure and other jobs that need doing, so there are more people buying their wares. That will help the economy far more than whining at the notion of high-earners paying tax at an appropriate level.