Mon, May 14, 2012 page9

• Ireland’s opportunity to reject impossible fantasy of austerity

  • By Gavan Titley and John O’Brennan / The Guardian, LONDON
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  In order to affirm its loyalty to Europe, the Irish political elite has decided that it is best not to pay too much attention to European reality. “Austerity” may be, as economist Joseph Stiglitz argued recently, “Europe’s man-made disaster,” yet the coalition government of Fine Gael and Labour has gambled on positioning Ireland as the poster child for Frankfurt and Berlin’s extended experiment in disaster denial. That neoliberal retrenchment through cuts and market-oriented “reforms” would push recession towards depression has long been obvious, but official strategy has been to place austerity in a realm beyond politics as a shared sacrifice necessary to restore investor “confidence.”

  Confidence is an elusive property, as Irish borrowing costs remain much higher than those of Italy and Spain and policies of “fiscal retrenchment” have not produced a change in the fundamentals of the Irish economy after four years of budgetary purgatory and social misery. The implacable fantasy has, of course, been resistant to evidence, but the decisive political rejection of austerity fetishism by the French and Greek electorates has opened up a democratic space of resistance at a time when popular opposition is taking shape in Ireland, and just weeks before the May 31 referendum on the EU fiscal treaty. The platform of “vote Yes for stability” is now faced with the difficult task of identifying the “stability” it expects the electorate to approve.

  Regardless, it appears that the ballast for stability will be provided by the manufacture of fear, as the “Yes” campaign has framed the vote as an existential choice for Ireland. The fiscal treaty will provide the bedrock for recovery and future stability, while a “No” vote could prove catastrophic, placing the country outside the European stability mechanism (ESM) — the EU lifeline to debt-ridden states — and thus unable to fund public services. A “No” vote would also damage Ireland’s reputation in Brussels and detract from its attractiveness as a destination for US foreign direct investment.

  LOCKING IN AUSTERITY

  The problem for the “Yes” side is that it must cajole a weary electorate to accede to the constitutional “locking-in” of austerity at precisely the moment that its ideological nature is fully exposed. Front-loaded fiscal adjustment has accelerated the rate of contraction in Ireland, as higher taxes and lower spending have reduced disposable income and aggregate demand. Far from encouraging a return to growth, Ireland is now in its fifth year of swingeing budget cuts.

  There will be virtually no growth this year, and the IMF’s own figures show that the ratio of debt to GDP will rise, not fall, in every year from 2008 to next year in the “PIGS” quintet. The staggering statistics for youth unemployment in Greece and Spain are now well-known — in Ireland the figure of more than 30 percent is kept artificially low due to high levels of emigration.

  The IMF forecasts that the economy will shrink this year, in real terms, in Greece, Italy, Portugal and Spain, while Ireland will struggle to reach 0.5 percent GDP growth. The architects of the hastily constructed fiscal treaty hope to commit these countries — and Ireland, once its quaint attachment to democratic ritual has been surmounted — to legal restrictions on already negligible political control over the economy. The treaty will diminish domestic oversight over budgetary policy and also inscribe abstract and highly politicized measures such as the “structural deficit” into the Irish constitution.

  For all the probably cosmetic public commitments to growth measures announced in the aftermath of French president-elect Francois Hollande’s election, this package of rules will almost certainly lead to even higher unemployment, accelerate further deflation and increase the substantive burden of debt. As Terrence McDonough, professor of economics at the National University of Ireland, Galway, summarizes: “Take a country at the bottom of a depression. Force it to run budget cuts and tax increases year after year after year. Force the same policy on its neighbors and trading partners. Run this into the foreseeable future and hope it results in stability, confidence and recovery. This is a dangerous experiment, completely without historical precedent.” It is also an experiment designed to further normalize the socialization of the massive, speculative debts of the banking sector.

  RESISTANCE

  While European developments sharpen the focus on this referendum, it also takes place at a moment when domestic resistance to austerity has begun to emerge, if not yet cohere. It has been a cliche of crisis coverage that society in Ireland has passively absorbed the cuts, with the elite refrain that ‘”we are not Greece, we will behave” mirrored in the chant of Greek protesters that “we are not Irish, we will resist.”

  However, the recent household tax boycott, which saw half of all registered homeowners refuse to pay a flat property tax, has suggested that the rejection of austerity politics now extends beyond the organized resistance of community groups and left parties.

  Opposition to a property tax may appear as an unusual conduit for progressive politics, but it was levied equally on mansions and the negative equity millstones that are the tangible legacy of the boom for tens of thousands. People struggling to deal with the combined impact of service cuts, salary losses and unemployment were regularly informed that “100 euros (us$129) is not a lot of money” (and in a sense it is not, when thrown at the socialized bank debt it was ultimately designed to service). How this collective refusal plays out in the referendum is difficult to predict, but the mantra of “no alternatives” will not be easily restored.

  Gavan Titley is lecturer in media studies at the National University of Ireland Maynooth. John O’Brennan is director of the Centre for the Study of Wider Europe at NUI Maynooth
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