Sunday 15 December 2019

Gene Kerrigan: Five years on, we're still stuck in crisis

Gene Kerrigan

Gene Kerrigan

Some people are very unhappy with the property tax. This is the latest Michael Noonan tax, which – from July – will cost households an average of €400 a year. It comes on top of all the other taxes and levies and charges they're extracting from us, to pay for the mess the bankers and speculators made. And some people think this €400-a-year tax is just plain wrong. They want it doubled. We speak, of course, of Ibec, the "voice of Irish business and employers".

To quote the Irish Examiner: Ibec "recommended the Government go for an ambitious property tax which would raise €1.8bn by 2015 as opposed to the €685m to be raised in local taxes, according to the Government's own figures."

That's patriotic of them, says I to myself. It made me feel somewhat shame-faced, to be honest. There was I, thinking Michael Noonan should stick his property tax where the sun don't shine. And the Ibec patriots call for even more pain.

Then, I spotted the kicker. Property taxes, Ibec says, should be doubled on householders, as this "could reduce annual commercial rates paid by business by €400m".

The way Ibec sees it, the new tax "provides the opportunity to lessen the burden on business", by shifting even more of the burden onto the mugs. And, you have to give those guys credit. They fight their corner.

A recent document boasted that Ibec is about "connections, knowledge, influence" – the holy trinity of modern Ireland. Circles within circles, nods, winks, and we'll sort that out at dawn tomorrow, on the first tee.

Ibec's job is to work to shift burdens off its members, and onto anyone else. Which usually means you and me. It represents some big players – including the banks. And Ibec is admirably cleared-eyed and open about its aims.

Wouldn't it be nice if those of us without those "connections, knowledge and influence" had an outfit as relentless in fighting our corner? The trade unions are supposed to do that, but after decades of various forms of "partnership" the trade union reins are held tightly by a thin layer of professionals. These highly paid folk see themselves as part of the establishment – they're used to sitting at the top table not just with Labour, but with Fianna Fail.

Their influence depends on being able to "deliver" their members. They need to be able, above all, to hold those members in check – and the bureaucratic and crony structures make that fairly easy. The members may grumble, but any rank and file efforts to change things will be frowned upon.

In theory, the Government is supposed to operate as a kind of super-referee, playing fair to all sides. File that one with the Tooth Fairy.

Of late, however, the old dependable set-up hasn't been working. Ibec didn't get its doubling of the property tax, the trade union bosses have grown used to getting fewer crumbs from the table of the mighty. These days, the Government takes its riding instructions from the ECB, EU and IMF, and the international bankers who dominate the troika.

For a while, many saw that there were positives in all this. Instead of useless politicians, and their banking and big business cronies, the economy would be overseen by technocrats. Undemocratic, of course, but those hard-nosed folk from the ECB and the IMF would be interested only in stabilising a damaged ship. As soon as they'd got us through the crisis, we'd elect more sensible politicians to run things.

That too we can file with the Tooth Fairy.

The old politics, the ideological claptrap that got us into trouble – the light touch regulation people, and their deference to bankers and bigtime gamblers – still reigns. It reigns in Cameron's Britain, where dead-eyed deficit hawks are steadily undermining not just the welfare state but the economy.

It reigns in the US Congress, where the "tea party" and "blue dog" nutjobs have done their best to undermine economic recovery. What matters to them, more than unemployment or standard of living, is cutting fiscal deficits. It's hard-edged ideology.

Conventional capitalism for decades understood that you cannot cut your way out of a serious recession – to concentrate on cutting deficits is disastrous. We can live with deficits, we can't live with a dead economy. Yet the deficit hawks still reign too within the ECB and the EU – and, most significantly, in Germany. They dominate the troika. Like computerised monsters, they plough ever on, wreaking havoc as they insist on following their ideological programme to the bitter end. Cut deficits, transfer debts from bankers to citizens, make up the slack by cutting services and incomes.

All this "fiscal consolidation" will sort out the crisis and bring about recovery. Except, for five years now, it hasn't. And it won't.

For five years, they've beaten the austerity drum – turning a crisis into a catastrophe. Last week, even the IMF (in discreet wording), admitted the truth. "Forecasters significantly underestimated the increase in unemployment and the decline in domestic demand associated with fiscal consolidation."

Translation: "Oops, we've blitzed the economy we were supposed to save." (As some of us said they would, back in 2008.)

Ibec happily followed the extreme right-wing drift, for five bloody years. Calling for incomes to be cut, the public service to be slashed – all the time depressing domestic demand and undermining the customer base of its own members.

Or, to be frank – its own small business members. The bankers were happy.

Now, there are signs even Ibec has doubts about the tea party politics that dominates the ECB. There are even signs of rebellion within the ranks of card-carrying uber-capitalists, with mutterings about Merkel's intransigence.

Dream on. Last week, the Basel Committee on Banking Supervision agreed new banking rules. These are the global banking regulators, who have been working since 2008 to ensure the banks are supervised properly, to prevent another collapse.

With friends in high places, the bankers got their way – the rules are to be, in the words of the Financial Times, "less onerous than expected". And the rules, which were to apply from 2015, won't now apply until 2019. "Good news for bank profits," said the Financial Times.

People like Enda Kenny and Eamon Gilmore haven't had a strategy. They do as they are told, and hope their faith will be rewarded with charity. Like Enda's equivalent in Portugal, they hang on grimly to the old politics that got us into this mess.

Recently, in Portugal, President Anibal Cavaco Silva slammed the right-wing government's austerity programme. "Fiscal austerity is leading to declining output and lower tax revenue. We must stop this vicious circle," he said. "There are well-founded doubts over whether the distribution of sacrifice is just."

Here, President Michael D Higgins stepped outside the consensus, in a speech at TCD on Friday. "I am so conscious of the discourse that concentrates entirely on the security of the currency, but is happy to leave aside the question of an enormous wedge of the population that are unemployed – 55 per cent of people between 18 and 24 in some countries."

Something's stirring. But, it's very late, and as yet very weak. The computerised monsters will continue to wreak havoc for some time yet.

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