"Recovery"? I hate the word. Give us an alternative!

Thumbs up for Recovery at Davos.

 With the general election seemingly destined to take place in late November of this year the narrative of the campaign will be dominated by one word; "Recovery".

Labour and Fine Gael will trumpet that they are delivering a recovery, pointing to unemployment figures, increases in GDP and other economic indicators. They will also brandish their bag of goodies in the form of the recently announced €27bn capital investment plan.

The opposition will maintain that all is not as it seems with the economic figures, that they do not tell the whole story, pointing out that many have not seen any improvement, that the "recovery" has not filtered down to much of the middle and working classes. That many of the new jobs are of poor quality, low paid and insecure with low hour contracts. They will also rightly point out that schemes like jobsbridge as well as continued emigration mask the true reality. It will also be hammered home that the policies of Fine Gael and Labour have favored the wealthy and left behind the majority, that inequality has increased  and that the most vulnerable in society, the very young, the sick, the disabled, the old, have been the harshest hit by austerity and that this has been by design. 

They will, as Sinn Féin for instance have stated, argue for a "Fair Recovery" or as Paul Murphy of the SP/AAA puts it; a "Real Recovery".

All of this is fair, true and laudable enough but we need to ask what is meant by "recovery"? 

To take it at its meaning it suggests a return to normality or to how things were before, to the state of affairs prior to the great calamity of austerity. But do we really want to go back? Do we want a "recovery", or to build something new?

This is not to suggest that Sinn Féin or any other party on the left are in favour of "going back" but my point is that the "recovery" narrative of the establishment parties needs to be challenged in it's entirety. The Celtic Tiger of boom and bust is not something we should wish to return to. This cycle is something which is systemic in the capitalistic system, so in that sense it is "normal". Do we want to "recover" this normality? A "recovery" in the meaning of the establishment parties is not something which is desirable and this point needs to be made, any "buying in" to the recovery narrative suggests, subliminally at least, that things are heading somewhat in the right direction.

We need to examine in greater detail the facts and figures behind the Celtic Tiger. The economic growth was almost solely based around the construction/property bubble and the resultant financialization of the economy with ancillary employment in that area. In terms of fundamental growth in the economy there was very little, it was all about the bubble and it was always destined to burst. 

Far from ordinary people getting rich, they got poorer. Wage levels in recent decades have largely stagnated but instead growth has been fueled by more readily available credit. We can see from the table below how debt rocketed thoughout the "good years".

Despite the on-going "recovery" Irish households are the third most indebted in Europe. The Irish government, and its people in general have been lucky that interest rates have remained extremely low, it is this which has facilitated the "recovery" more so than any policy over which the Irish state has direct control or influence over. Given the debt levels and openness of the Irish economy we are extremely vulnerable to any international "shocks" even those as straightforward as small interest rate increases. 

We are at the mercy of the international finance system. Given the small size of the Irish economy perhaps this is inevitable but our over-reliance on FDI to provide jobs and industry is something which is self inflicted. 

To get back to the point of this article, we should not look for a "recovery", we should look for an alternative. To those with original ideas and those who seek to build a sustainable alternative, one which puts as much control as possible in the hands of the Irish people and not that of international bodies, markets or oligarchs. 

We need to get out and support those on the left in arguing for systemic changes, not mere tinkering around the edges,  otherwise we will find ourselves going down the same road again.

We need an alternative to what went before, not a "recovery".

The First Great Robbery of the Irish People - and Today's Sequel

One would be forgiven for thinking that the current situation Ireland finds herself in is unprecedented, that the Great Robbery she is currently experiencing, the Irish people being forced to pay debts which are NOT THEIRS, is an entirely new phenomenon. It’s not.

Irish history is littered with traitors and betrayals. If we look at what has been, more oft than not, a disgusting creature, (honourable exceptions of course) the Irish politician, three great betrayals of the Irish people stand out. The first was passing the Act of Union in the Irish House of Commons on 1st August 1800. The second was voting to accept the Anglo Irish Treaty on 7 January 1922. The third was the Bank Guarantee of September 30^th 2008.

Just prior to the 1798 rebellion Irish public debt stood somewhere in the region of £4,000,000. However by the act of Union in 1801 that debt stood at £26,841,219, nearly seven times as much as it was just three or four years before.

All of the expenses that Britain incurred over those three or four years, the huge sums it cost to maintain a vast army in Ireland to crush the rebellion, the money needed to bribe juries, to pay and give pensions to spies and informants, the money needed to influence members of the Irish House of Commons to pass the act of the Union – all these and more were charged to the Irish account.

The Irish were made to pay for the privileges of those terrible years, to pay for the slaughter and destruction. Today we pay for, and suffer because of, the reckless actions of banks, domestic and foreign, and for the reckless gambling bondholders engaged in. We also pay to bail out the developers and golden circles. We give massive pensions, and through NAMA, wages to those who brought us to this terrible position, the politicians and their developer friends. Both then and now the ordinary Irish people were made to pay, and suffer, to preserve the comfortable position of native and foreign elites.

Following the act of Union the “books” of Ireland and England were to be kept separate under the following terms;

I. Ireland would have no liability for British National debt incurred prior to the Union.

II. The separate debt of each country being first provided for by a separate charge, Ireland was then to contribute two-seventeenths towards the joint or common expenditure of the United Kingdom for twenty years.

III. Ireland’s taxation would not be raised to the (higher) standard of Britain until the following conditions should occur:

1. That the two debts should come to bear to each other the proportion of fifteen parts for Great Britain to two parts for Ireland ; and

2. That the respective circumstances of the two countries should admit of uniform taxation.

These conditions were protested against by opponents of the Union, particularly with regards to the ratio the debts would have to be to one another to warrant an amalgamation of the debt and an increase of the tax in Ireland to Britain’s higher levels. (England’s debt would have to amount to seven and a half times that of Ireland)

“The monstrous absurdity you would force down our throats is, that Ireland's increase of poverty, as shown by her increase of debt, and England's increase of wealth, as shown by diminution of debt, are to bring them to an equality of condition, so as to be able to bear an equality of taxation." – Foster, Speaker of the Irish House of Commons, 1800.

They also protested at the fact that the Irish would have to pay two seventeenths of the common expenditure of the UK, as this was obviously far too high an amount which simply could not be paid.

 At the act of Union Imperial spending was approx £25,000,000. By 1813 it was over £72,000,000.

Britain racked up huge amounts of debt financing her wars against France and funding France’s enemies – much of this debt was hoisted upon impoverished Irish shoulders.  During this period Ireland’s debt increased more than twice as fast as that of England.

The dramatic increase in “Irish debt” can clearly be seen in the following table:

By 1817 the charge on Ireland’s debt was the same as its total debt before the rebellion of 1798.

Fosters “monstrous absurdity” proved worse than he had feared, as both debts increased. Ireland’s debt in 1794 had been only a sixteenth of the amount England owed. Now England owed three and a half times the amount that Ireland “owed”. This was over the seven and a half time limit in the Act of Union; this allowed the two “national” debts to be combined and the Irish rate of tax to be increased even further to match that of Britain.

Thus Ireland was loaded with debt which was not her own in order to allow increased taxes for the Irish, and to bring about the combination of the British and “Irish” debts in order to force the Irish to contribute towards Britain’s pre union debt as well as that incurred since.

After being loaded with this massive unsustainable foreign debt Ireland was ‘heroically’ bailed out by the British by way of an act consolidating the British and Irish exchequers – at the time some Irish politicians spoke, as they do today, of the debt on Irish books as “Irish debt” - while it was anything but - and British politicians spoke of the Act consolidating the Exchequers as being a massively generous move by them to rescue the Irish.

In this way the Irish were made pay the debts of elites. Domestic and foreign. To pay for their own subjugation and suffering. Sound familiar?

This was the First Great Robbery. The Second Great Robbery, which we are living through now, is an even more daring, devious, underhanded and villainous one then that of the early nineteenth century. We are allowing history to repeat itself. Then, as now, Irish sovereignty rests not with the Irish people but with parasitic elites, domestic and foreign.

The national debt has increased to astronomical levels, (it stood at over 169 Billion Euro at the end of 2011). Debt as a proportion of GDP rose from 25% in 2007 to 106% per cent in 2011. The rate of interest we pay on the debt is many times the growth rate of the economy. In other words we cannot grow our way out. It is impossible for things to continue as they are. There will be some form of write down, there has to be. Those who hold Ireland’s sovereignty will write off the absolute minimum they have to, leaving Ireland with a somewhat smaller debt, but still an extortionately high one. Otherwise they may get nothing paid back. The FG/Labour government, and media, will herald this news. The fact that NONE of the debt incurred bailing out the banks and paying off bondholders should be paid - as it is not our debt - will be swept under the rug as the establishment pats itself on the back.

As if only having to pay most of someone else’s debt is to be applauded.

As Irish people we need to do more to stop this massive injustice.

Fool me once...

Historical Sources:

'Eighty Five Years of Irish History', 1800-1855 - Daunt, William J. O'Neill

'The Financial Grievences of Ireland' - Daunt, William J. O'Neill

'The History of Ireland' - John Mitchel