Your Guide To Economic Propaganda
Your Guide To Economic Propaganda
In the run up to the budget, a host of economic experts are
warning of dire consequences if the population does not behave itself. The
mantra is to accept pay cuts, reductions in public services and bank bail outs.
Myth 1: We should listen to experts. They have studied
economics and the government is only taking their advice.
The economists who appear regularly on the media are
pro-capitalist and do not know how their own system really works.
None of them saw the crash coming and so their cures should
be treated with utmost scepticism.
The top economics institute, the ESRI, claimed that the
Irish economy would grow by 3 percent in 2009 and that an extra 24,000 jobs
would be created!
Others such as Eunan Halpin wrote
that ‘conditions for a spiral down and a recession are not present’.
Irish economics is totally dominated by right wingers who
promote attacks on wages rather than on profits. They have been turned into a
new priesthood by the media so that we will do their bidding.
Myth 2: But the government has to borrow over €20 billion
and so cutbacks are necessary. If we don’t take the ‘hard medicine’ now, it
will be worse later.
The huge government deficit is a symptom but not the cause
of the crisis. Before 2007, for example, there was no deficit as government
revenue was €65.1 billion and spending was €64.6.
The economic crash has wiped out many tax revenues. VAT
rates have fallen; PAYE taxes are down, property taxes tumbled and more is
being spent on social welfare payments.
But the cutbacks have made matters worse. You can see this
easily through simple figures.
In October 2008, the government claimed that the budget
deficit would rise to 6.5 percent of GDP and that cutbacks were needed.
But in January 2009, the budget deficit had risen to 9.5
percent – and so more cuts were demanded in an April budget.
Yet, after all these rounds of cutbacks, the budget deficit
has now risen to 13 percent. In other words, all the sacrifices have been
wasted because the debt is even higher.
The reason why this occurs is simple. If personal
consumption is already depressed through unemployment and wage cuts, reductions
in government spending only add to the slow down in the economy. There is even less
money to go around and a spiral of economic depression sets in.
So instead of digging a deeper hole, we need to embark on a
jobs programme that puts people back to work.
Myth 3: We need pay cuts to become more competitive. That
is the only way to increase exports and create jobs.
More propaganda! According to the US Bureau of Labour
Statistics, Irish labour costs are lower than those in
,
,
,
,
,
,
Holland
and
Sweden
.
One reason is that workers on put in longer hours than
their counterparts in other parts of the EU. Workers receive only 29 days in
public holidays compared to an average of 34 in other countries.
Irish employers make the lowest social security
contributions in the EU. They pay approximately 10 percent of employment costs
compared to 45 percent in
and 35 percent in
Italy
.
As Brian O'Boyle points out in the accompanying article,
Irish exports have actually risen in the last years – in comparison to major
fall-offs in other county’s exports. Moreover, the main export sectors pay
above the average Irish wage – so the right wing argument makes no sense.
Myth 4: We must rescue banks because otherwise they will
not provide credit and the life blood of the economy will dry up.
The rescue of the private banks has already cost the
population €11 billion through capital injections into AIB (€3.5 Billion) Bank
of Ireland (€3.5 Billion) and Anglo-Irish (€3.8 billion)
NAMA will cost another €20 to €30 billion because the
government is lying when it claims that only 20 percent of its loans will
default.
They base this figure on a comparison of the loan book of
Barclay’s bank in the 1990s. But many of the loans NAMA will take
responsibility for are already ‘impaired’ and the assets backing them are based
on the re-zoned price of land.
The Irish Glass Bottle site in Ringsend
provides a good example. Speculators took out a
loan of €450 million to purchase of a few acres. But today the land
is only valued at €60 million.
In other cases, €9 billion of interest has already been
‘rolled over’ by bansk who handed them over to NAMA.
So clearly, many more builders will default – and that will cost Irish society dearly .
NAMA is therefore only a pretext to rescue the wealthy elite
who run the banks.
Once they get the money, they will use it to pay off their
huge debts to foreign bankers
And as David McWilliams points out they will probably use
the rest to purchase Irish government bonds which pays 5.70 percent in interest.
These bonds raise funds to cover the national debt which has grown because of
NAMA!
So instead of providing credit to risky, small businesses in
a recession, the banks will sit just back and watch the profits roll in.
You say that the government deficit is only a symptom of
the problem. What is the underlying cause of what is going wrong?
Irish capitalism crashed because the greed for profit led to
a crisis of over-production in housing. There are now a quarter of a million
unoccupied dwellings – even though 50,000 people need accommodation. It shows
the madness of the market.
Once the crash occurred, the rich slammed on the breaks and
staged an investment strike. Some of their money was certainly wasted on
speculation but they are also hoarding the rest and moving money out of the
country.
Since 2007, gross domestic fixed capital investment has
fallen by 42 percent. The investment strike is not just in construction but
there have also been serious falls in investment in machinery and equipment.
The fall in capital investment is four times higher than
and three time higher than the
or
Britain
. In reality, this takes us
into the territory of the
Wall St
crash of 1929.
No solution to the crash can be found until this issue is resolved.
Either the capitalists who control this wealth will be allowed to hoard it
until they blackmail society to accept their demands – or we take it off them.
This has now become the decisive issue for Irish society.
So what is the SWP’s solution.
We can start by introducing a host of punitive tax measures
to transfer wealth. So all income over €100,000 should be taxed at a surcharge
rate of 70 or 80 percent; tax fugitives should be made to pay taxes
retrospectively; an annual wealth levy should be introduced.
Even these measures would require huge popular pressure to
break the resistance of a wealthy elite who
think that ‘taxes are for the little people’.
But in themselves they are barely adequate for the scale of
what is happening.
The reality is that we need large, popular working class
mobilisation to foment a social revolt that takes control of the wealth of this
society.
This means starting with a general stoppage and escalating
it until such a point that we take control of the factories, office and all the
means of production.
Nothing less will save us from the huge sacrifices that the
elite have planned for us.
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