Monthly Archives For June 2014

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From Alpha to Omega Podcast #050: The Matrix

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This week I am delighted to welcome back the economist, economic historian, and extremely prolific author, Professor Michael Perelman of the California State University, Chico. We talk about the latest book he is working on: ‘The Matrix: An exploratory political economy of the dangerous, paradoxical interactions between war, the economy, and economic ideology’.

We discuss unintended consequences, the difficult of decision-making in complex situations, US Imperialism, Vietnam, Heavyweight Boxing ,and the little talked about darker side of Winston Churchill.

You can check out the Professors books here

And here is his blog:

http://michaelperelman.wordpress.com/

Enjoy!

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In Depth: What’s Really Happening In Venezuela

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A talk followed by Q&A:  

                    Alvaro Sanchez

 (Charge d’Affaires, Venezuelan embassy to Ireland and the UK)

Introduced by:

Jack O’Connor – General President SIPTU

On:         14th July 2014

At:         Liberty Hall, Dublin

Time:    7pm

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Closer to the Bottom than to the Top

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Irish living standards are now closer to the bottom of the EU-15 countries than to the top; they are closer to Greece than to Germany or Belgium or the UK or most other EU-15 countries.

Eurostat has just released its annual estimates of household living standards. To measure this they use Actual Individual Consumption (AIC).  According to Eurostat:

‘In national accounts, Household Final Consumption Expenditure (HFCE) denotes expenditure on goods and services that are purchased and paid for by households. Actual Individual Consumption (AIC), on the other hand, consists of goods and services actually consumed by individuals, irrespective of whether these goods and services are purchased and paid for by households, by government, or by non-profit organisations. In international volume comparisons, AIC is often seen as the preferable measure, since it is not influenced by the fact that the organisation of certain important services consumed by households, like health and education services differs a lot across countries.

For example, if dental services are paid for by the government in one country, and by households in another, an international comparison based on HFCE would not compare like with like, whereas one based on AIC would. . . Actual Individual Consumption per capita is an alternative indicator better adapted to describe the material welfare of households.’

In short, AIC captures goods and services bought by households and by Governments on behalf of households.

The following table shows the relationship of European countries’ living standards to the EU-15 average, with the EU-15 equalling 100.

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Ireland is approximately 11 percent below the average EU-15 living standards.  We rank 12th in the league table.  What’s noteworthy is that we are closer to Greece than to most other countries.  We are 14 indice points above Greece but 15 points below the UK.  There are eight other countries above the UK.

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Here We Go Again – Blaming Workers Again

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Previously, I discussed the assertions that rising housing costs were caused by over-paid construction workers.  It wasn’t true but that never stops some commentators from trying to find blame – and finding it in workers’ pay packets.  It’s been going on since the start of the crisis.  And it still goes on.

The Irish Times reported that consumer prices in Ireland are still much higher than in most other EU countries:

‘Even after six years of austerity, consumer prices in Ireland are on average 18 per cent higher than the European Union norm, prompting renewed concern about the country’s competitiveness.’

Why should this still be the case?  Costs associated with being an island on the periphery (transport and import costs?).  Oligopolistic price-setting in key sectors?  Alan McQuaid, economist with Merrion Stockbrokers, believes he has part of the answer:

‘The other key issue which these figures highlight is the underlying cost for retailers – eg rents, insurance and wage costs – are higher than elsewhere. You cannot look to have one of the highest minimum wages in Europe, and then not be surprised that prices are more expensive than the rest of the bloc.’

Oh, my, it comes back to those darned over-paid workers, this time in the in the retail sector where workers are undermining our competitiveness by getting an average weekly income of €512 a week (and this includes management salaries; weekly income for shop floor workers are bound to be much lower).

Let’s look at this claim about high wages in the retail sector and see how we compare with other countries, using the National Accounts here and here.  We will use the Wholesale / Retail sector (there is little data at the retail sector only) but this sector as a whole would impact on costs for  consumers.  First up, employee compensation.

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Ireland is below the mean average of other EU-15 countries (no data for Sweden) and well-below most other countries.  We’re only higher than other peripheral countries and low-paid UK.  This shouldn’t be surprising.  Unite the Union examined employee compensation using the Eurostat Labour Cost Survey and found pretty much the same picture.

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Scapegoating During a Time of Crisis

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The following piece is based on a much longer article ‘Scapegoating During a Time of Crisis: A Critique of Post-Celtic Tiger Ireland’, co-written by Micheal Flynn, Lee Monaghan and Martin Power. It is available here.

Austerity and Scapegoating: two sides of the same coin

Class war is in large part a propaganda war; it is in no way confined to formal political life, but  works its way through all the institutions of society. For the most part it is the ruling class that is advancing – most obviously through the commercial media, which so often serves to divide, disempower, demoralise and dis-benefit the working class.

Only a few years ago it was generally accepted that bankers, developers and speculators destroyed Ireland’s economy. In the wake of the collapse, Brian Lenihan’s claim that ‘we all partied’ was rightly understood as an attempt to deflect blame from those actually responsible. Most understood that it was the recklessness of the investing classes, coupled with the political decision to socialise private bank debt that had forced hundreds of thousands on to dole queues and/or through airport departure gates. For a time, the anger of the population was focused squarely of those that had destroyed the economy.

Yet, notions of collective responsibility have been carefully fostered ever since. The idea of a specifically Irish lust for property (or even a ‘property-owning gene’) appears to have become the common-sense of our time. The commercial media, with the help of the trendy economists elevated to celebrity status, such as David McWilliams, reason that everything went askew because of a ‘cult of property’. We Irish gave in to a ‘mass delusion’ – or as Indakinny so eloquently explained ‘we all went a bit mad with borrowing’.

Consequently, and very conveniently, the role of developers, speculators and politicians – their systematic destruction of alternatives to crippling mortgage debt, the role of section 23 tax breaks, the endemic planning corruption revealed by the Mahon tribunal, are all put out of sight as blame is socialised. This makes it far easier to justify the on-going socialisation of debt, which in turn helps to rationalise the ‘tough decisions’ that government insists are unavoidable. The subsequent apportioning of blame to specific targets is likewise done in a manner consistent with the distribution of austerity.

As expected, cuts to the public sector have gone hand-in-hand with attempts to demonize public sector workers. With the public sector now on the chopping block, ‘over-paid’ and ‘under worked’ public sector workers have been identified as unbearable burdens on the public finances. Rather than remain focused on where the billions are actually going, attention is paid to a ‘privileged’ public sector. This cultivation of resentment gives licence to savage cuts and softens the public up for privatisations. Even better, damage done to the highly-unionised public sector also damages the trade union movement, which when weakened makes for more effective attacks on pay and conditions down the line.

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Championing the Affluent

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The affluent are blessed in their champions.  They have a myriad of commentators fighting their corner.  In the Sunday Independent Colm McCarthy, discussing the benefits or otherwise of a third tax rate on high incomes, stated:

‘In order to raise meaningful amounts, it (the threshold to enter the third rate of tax) cannot be pitched at a level much higher than the €100,000 indicated, but that pulls into the high-tax bracket many people who do not consider themselves exceptionally well-off.’

€100,000 not exceptionally well-off?  Ok, maybe, but they certainly are ‘well-off’; very well-off.  In fact, they are in the top 3 percent of income earners in the state.  If these high-earners don’t consider themselves exceptionally well-off, what would they think if they were part of the 50 percent of income taxpayers who earn below €29,000 a year?  Or the 25 percent of the population who live in official deprivation.

These kinds of comments are part of the don’t-tax-high-earners-too-much-because-then-they-will-leave-in-a-tax-huff argument.  Thomas Molly, writing in the same newspaper, puts it this way when discussing the wealth tax:

‘Any other sort of wealth tax is likely to bring in very little money as the cash moves overseas at warp speed but is guaranteed to scare away many of the people who create wealth and jobs in our society.’

Ah, tax flight – the phenomenon whereby high taxation causes people to leave the jurisdiction.  How valid is this?  Not very.  The US is a good place to study.  Individual states can set their own income and wealth taxes in addition to Federal taxes.  And moving from one state to the next is not nearly as challenging as moving from one EU country to the next.  So what happens when states like Maryland or New Jersey or Oregon raised taxes on the highest income groups?  This study – ‘Tax Flight is a Myth’– found:

‘Attacks on sorely-needed increases in state tax revenues often include the unproven claim that tax hikes will drive large numbers of households — particularly the most affluent — to other states. The same claim also is used to justify new tax cuts. Compelling evidence shows that this claim is false. The effects of tax increases on migration are, at most, small — so small that states that raise income taxes on the most affluent households can be assured of a substantial net gain in revenue.’

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Does Ireland Need a New Left Party?

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This article is based on a talk given at conference “Local Resistance, Global Crisis” at National University of Ireland, Maynooth, 13th of June 2014

Does Ireland need a new left party?

Yes.

Why?

We are involved in a colossal class struggle and we are not winning.

We need to confront the very system that is demanding ever more drastic redistribution of wealth from below to above, accelerated accumulation by dispossession, continuing dismantling of the public sphere in favour of private property and commodified culture.

It is not enough to go issue to issue, to oppose cuts, to denounce austerity.

We need to win consent to a counter-narrative to the dominant view of the crisis. We need to break the grip of the belief that there is no alternative.

We need to fashion a force that will challenge for power that will make the long march through all the institutions of society: schools, universities, media, trade unions, local councils, national and international parliaments, production, distribution and exchange.

We need the best possible left. We need to maximise our efforts.

We need to build on electoral gains by the left in elections of 2011 and 2014. The last general election saw the greatest overturning in Dail Eireann in its history and the next will outdo it, we have every reason to believe. The last elections and recent polls indicate a huge shift, primarily to the left, in Irish politics.

We need to aim to form a left government in the next decade or so.

For this, we need a new left party. A party of a new type. By which I don’t mean a Marxist-Leninist vanguard party. Traditionally parties of the left have been communist, Trotskyist or social democratic parties. This would be different.

We have a multiplicity of left parties of the traditional types, quite a few of them M-L vanguard parties. All of these have maxed out their potential in their present form. Some are still vital, while others have been in decline for some time.

In the first category are the Socialist Workers Party and Socialist Party, each of which have formed broader fronts, the People Before Profit Alliance and Anti-Austerity Alliance. In the second category are the Communist Party of Ireland and Workers Party. The two Trotskyist parties and their broader fronts have been especially active on the streets and in electoral politics and they have achieved considerable success. They also built and broke the United Left Alliance.

None of these formations, in and of themselves, form the basis for the sort of new left party we need. They will be important in the future of any new left formation, but a new left party cannot be ULA 2.0.

We also have two bigger parties of the left, although some may contest whether they are left: the Labour Party and Sinn Fein. They are left, but not as left as what we need. This is primarily because they do not engage in systemic analysis and therefore they do not move in the direction of systemic transformation.

There is a big empty space where a big party to the left of LP and SF should be. We need a new left party to fill this space.

What kind of new left party should this be?

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Mass Deception and the Manipulation of our Minds

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Book Review: Understanding Shadows: The Corrupt Use of Intelligence. Michael Quilligan, Clarity Press. $21.95

A convenient narrative of our times, prevalent in news media, entertainment channels such as TV and movies, and across a wide range of literature, is that the ‘intel’-led security state began in 2002 just months after a tight and cheaply funded operation by a previously little-known group brought down New York’s twin towers and killed almost 3,000 people.

This narrative, which has developed multiple strands and threads, by now woven into a fabric which goes virtually unquestioned, is false, as this book demonstrates.

Michael Quilligan’s focus is on the weapons of mass deception which elites and states use to keep us ignorant. His book is a meticulously researched and corroborated survey of how ‘intelligence’ is used to hide, distort, and bury the truth of great events, and instead implant a ‘version’, a narrative, which reflects the requirements of the rulers of the world and serves to conceal reality.

Intelligence services and their linked military, criminal, and undercover ‘assets’, do a lot of things, of which spying is perceived as the most exciting and glamorous. But they do more.

For example, they murder. The French secret service’s assassination of a Greenpeace photographer in New Zealand is an egregious example, another the almost incessant stream of doorstep killings and public executions by Israel’s Mossad. And now we have daily murder by drone and missile on the orders of a former law professor who became President of the United States, carried out from secret bunkers by agents of one or other of the plethora of intelligence agencies which have been so expanded since 9/11 as to constitute a state, an unanswerable state, within a state.

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Republicanism and Nationalism; What Have They Ever Done for the Workers?

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Fluther (angrily): What th’ hell do I care what he says? I’m Irishman enough not to lose me head be follyin’ foreigners!

Sean O’Casey ‘The Plough and the Stars’

Sean O’Casey ‘The Plough and the Stars’

In the Monty Python film the ‘Life of Brian’ one of the discontented lefty proletarians asks a very pertinent question – What have the Romans ever done for us?  The answer was apparently quite a lot.  Much of the humour in the scene derives from the questioner being reduced to a dumbstruck silence. Nevertheless it was a question well worth asking.  In the run up to the centenaries of the rising, the war of independence and the civil war the question, what have they ever done for the workers, needs to be asked again.

Republicanism in History

Republicanism has a long history stretching back to the ancient roman republic.

It was far from a harmonious state but riven by class conflict between patricians and plebeians.  Attempts at land reform and wealth redistribution ended with the respective murder and suicide of its two advocates (Boatwright et al, 2004).  Beyond that point the republic was dominated by an oligarchic gang of large land owners until its demise under the emperors.

Republicanism was to raise its head again in Britain between 1649 and 1660.  Cromwell had come to power through an alliance with middling disaffected landowners, merchants and artisans.  Yet he was aghast when the republican revolution and the associated political ferment spawned groups, such as Levellers, Diggers and 5th Monarchy Men, some preaching and attempting to practice a primitive form of millenarian communism.  Levellers demanded complete religious toleration, democratic control of the army and bi-annual parliamentary elections while the Diggers claimed that the land belonged to the whole people of England.  The republican Cromwell was having none of it and told his bourgeois supporters ‘you must cut these people in pieces or they will cut you in pieces’ (Morton, 1938)

After 1789 some of the French revolutionaries looked back to the roman republic as an exemplar. They abolished feudalism and the divine right of monarchy, proclaimed the rights of man and citizens and that great slogan Liberty, Equality and Fraternity.  Almost immediately a difficulty arose as to how these slogans could be given a concrete realisation and were they to apply to those outside the ranks of the middling classes.  The answer was not long in coming.  In 1791 the convention passed a law (Loi Le Chapelier) outlawing combination of workers or trade unions (Hepple, 2010).  The ongoing conflict between bourgeois and proletarians was temporarily halted by Napoleon.  Dictatorship preserved the social and economic conquests of the revolution for its main beneficiaries – the middle classes (Goodwin, 1963).  Nonetheless the class conflict stirred up by the revolution was to figure prominently in the politics of the French Republic for a century and a half (Hampson, 1989).

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Making Work Pay Requires More Social Protection Expenditure

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What are we to make of the two headlines this morning?  First, from the Irish Times:

‘Work pays better than welfare for most unemployed, ESRI finds’

And then there’s this from the Irish Independent:

‘Why families are better off staying on social welfare’

Both stories refer to a study that will be launched today by ESRI researchers, using the institute’s Switch tax-benefit model that allows a detailed examination of households’ financial situation both in work and out of work.  I will be going into more detail once this report is published but in this post I want to address a broader narrative: namely, to ‘make work pay’ requires more social protection spending and more public intervention into key markets.

The Irish Times reports two findings:

  • Nearly six out of seven people would be financially better off in work than on welfare (or nearly 85 percent)
  • Among those people in employment or unemployed facing a situation where work pays less than welfare, more than 70 per cent chose work rather than welfare.  So much for ‘life-style’ choices.

The Irish Times report goes on to state that:

‘The finding appears to debunk the myth that Ireland’s relatively generous social welfare system gives no incentive for people to work.’

Of course, we don’t have a relatively generous social welfare system but that’s another story.

The Irish Independent, however, focuses on the small numbers who would be better off on social protection.  They report that 45,000 workers would not receive any benefit from taking up work, of which 22,000 would actually lose money.  However, even the Indo report admits that most people still take up work, regardless of the financial impact.

So to the degree that people are not better off taking up work, what is the reason?

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Basic Income Summer Forum

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This article originally appeared on Ian Maleney’s Tumblr page, Interstate808.

On Saturday afternoon I attended the first half of the Basic Income Ireland Summer Forum in Dublin. I went along for the talk by Yannick Vanderborght, a leading campaigner for Basic Income in Europe. He spoke for about forty-five minutes or so, just giving a brief overview of the theoretical and political sides of the argument for and against Basic Income. Unfortunately I couldn’t stick around for the discussion afterwards.

The first part of the talk related to the “theory” side of Basic Income, the justifications for it and challenges to it, and it’s on this part that I would like to focus here. There’s plenty of information available online about the political side, with organisations all over Europe (and further afield) all engaged in pursuing the BI agenda and attempting to raise awareness for it. The Basic Income Earth Network is a good place to start.

Vanderborght outlined three main challenges to the idea of a Basic Income Guarantee.

—The Migration Challenge:

This argument says that any state that enacts Basic Income would instantly become a “welfare magnet”, attracting huge numbers of migrants looking to avail of it. EU law says that each EU state is required to provide social security to any EU citizen resident there. So, if Ireland were to enact BI, any citizen from any EU country could come here to live and the state would have to provide them with the same BI as they would someone born here. The argument suggest that such potentially high inward migration would make the scheme unfeasible.

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The Long Term Deceleration of the US Economy

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This chart shows the dominant long term trend in the US economy – gradual deceleration. A 20 year moving average is used to eliminate all cyclical or short term trends. The deceleration from 4.4% in 1969, to 4.1% in 1978, to 3.5% in 2002, to 2.5% in the first quarter of 2014 is clear. The temporary recovery in the late 1990s and beginning of the 21st century proved unsustainable and was followed by a sharper fall.

This trend shows that the most enduring feature of the US economy, which must be explained by any analysis, is not any analyses of business cycles, particularly those of a ‘manic-depressive’ type, but this very long term slowdown of the US economy.

Furthermore, as this deceleration has been going on for 40 years, it clearly has extremely deep roots which are very difficult to reverse. Unless dramatic changes in US economic policy take place, therefore slow deceleration should be built into projections for the US economy.

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The Cost of Our Health

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Do we spend too much on healthcare?  The EU Commission seems to think so.  In their country-specific recommendations for Ireland they state:

‘Even though Ireland has a relatively young population, public healthcare expenditure was among the highest in the EU in 2012 at 8.7% of GNI, significantly above the EU average of 7.3%.’

The implication is that our spending on healthcare is 16 percent above EU average levels.  What more justification does the Government need to continue cutting our health services than to get a recommendation from the EU?

There’s only one problem.  The EU Commission numbers are wholly unreliable and not a proper representation of health spending in the EU.

Before getting into the EU numbers, let’s see if we can discover just how much Ireland and other EU countries spend on health care by referring to the OECD’s Health at a Glance.

There are two measurements that can be used; first, health spending as a proportion of economic output.  The latest year they have data for is 2011.  To compensate for the fact that GDP is not a good measure for Ireland, I have used the Irish Fiscal Advisory Council’s hybrid GDP which measures fiscal capacity.  This hybrid measurement stands between GDP and GNP.

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Ireland is just below the average expenditure of other Advanced European Economies (i.e. EU-15) – but there is a major caveat which I will refer to below.  It should be noted that if we used a straight health spending as a percentage of GDP, Irish spending would be 8.9 percent of GDP.  Of course, benchmarking any expenditure against GDP has its problems, especially when a Government has been pursuing austerity policies that actively reduce the GDP.

For an alternative view, we can turn to the OECD’s measurement of healthcare expenditure per capita, using purchasing power parities to account for differences in currency and living standards.

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What Can Come of the Leftward Movement in the Irish Local and Euro Elections?

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The left are on the march in Ireland since the local elections. Irish people and Irish political culture is slowly changing. The old description of Whyte (1972) that Ireland possesses a politics ‘without social bases’ is coming to end. Class politics has started to arrive and the old ‘two and a half’ Irish party system, with the demise of Labour, is no more. These developments present real opportunities for the left in Ireland and for the people who have been oppressed by austerity. In this context, this article attempts to factor in the gains on the left and predict the future at the next election.  This is done to see whether at last we can have a progressive left-dominated government which can prioritise public services, workers, the welfare state and offer fairer taxes, and other progressive measures that this left government would bring.

Dr Adrian Kavanagh has been doing some excellent work in recent times examining opinion poll data since the FG/Labour government came to power in February 2011. Also, Tom Louwerse’s analysis, which calculates the average across all opinion polls from April 1st 2011 to April 1st 2014 is very useful. Reading off the approximate values from the Louwerse graph (politicalreform.ie), the analysis suggests that constant first preference party support is as follows:  FG (25%); FF (22%); SF (18%); Labour (8%); other parties/Independents (20%); Greens (3%).

The European elections indicate the following first preference party support levels: FG (22%); FF (22%); SF (20%); Other parties/Independents (30%); Labour (5%).

The final result for the Local Elections shows the following first preferences: FF (25%); FG (24%); Other Parties/Independents/Greens (28%); SF (15%) and Labour (7%).

Adrian Kavanagh uses a model to predict the number of seats that first preference votes would give to each party and he does this for all the final national opinion polls produced in the weeks prior to the Local and European Elections 2014. His analysis is based on this RTE commissioned ‘poll of polls’ of May 21st, 2014.

This gives the following breakdown: FG (24%); FF (22%); Labour (7%); Independents/Other Parties and Greens 26%.

Corresponding to this ‘poll of polls’,  Kavanagh predicts the number of resultant TDs in the Dail if a general election was held, as follows: FF (38); FG (45); Labour (2); SF (32); Independents/Other Parties/Greens (41).

I have analysed the ‘Independents & Other’ TDs (which includes left parties such as SP and PBP which opinion polls still categorise as ‘Independents/Others!) in the current Dail, as follows:

Currently there are 28 in total at this point. Of these 28 TDs, 11 come from mainly FG gene pool, that is, supporters of Lucinda Creighton, with the remaining being ex FF or PD.

However, the majority of the 28 seats, 17 in total, are from a ‘left’ leaning/ ‘people power’ gene pool in terms of their political philosophy. These include: Tommy Broughan (ex Lab); Joan Collins (People Before Profit); Clare Daly (Ind Left); Stephen Donneely (Ind); Luke Ming Flanagan (Ind); John Halligan (Ind); Finian McGrath (Ind); Catherine Murphy (Ind);  Ruth Coppinger (SP); Maureen O’Sullivan (Ind); Tom Pringle (Ind); Shane Ross (Ind); Roisin Shortall (ex Lab); Mick Wallace (Ind); Richard Boyd Barrett (PBP); Seamus Healy (TUAG); Joe Higgins (SP).

If we assumed that these 28 existing TDs were to get re-elected next time, which is not too unreasonable, then Kavanagh’s analysis suggests that at least a further 13 ‘Independent/Other TDs will also be elected at the next general election.

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