Skip to main content

The Budget

Well! The Irish Budget which promised draconian cuts in expenditure certainly lived up to expectations with most of the burden falling on public servants and welfare recipients. Naturally both Trade Unions and members are extremely angry as a result. However the important question that really arises relates to the existence - if any - of more palatable alternatives.

From one perspective I actually applaud Brian Lenihan for at least having the guts and leadership qualities to follow through on what he considered necessary and yet which was bound to be highly unpopular among large sections of the population.

And indeed there is a valid case for the measures he took. Overall expenditure is way out of line with revenue receipts. Also surveys show that public sector pay in general is much higher than the private sector in an economy that is seriously lacking in competitiveness. Quite simply the price of most products and services is excessive at present in Ireland. Likewise due to an actual fall in inflation during the past year, the real value of welfare receipts has increased. Thus there was a good case to tackle such expenditure.

Unfortunately Ireland is now heavily dependent on satisfying international opinion on how to address our problems. The Minister can justifiably argue that bond charges would be much higher if harsh measures were not now taken. Likewise investment from multinational investment e.g. manufacturing and finance) which comprises 90% of Irish exports could be badly hit in the absence of such tough measures.

However there is a deeper issue that has not yet been directly addressed in the ongoing debate in Ireland.

Due to our attempt to achieve rapid growth the economy is now greatly mortgaged to the sentiment of outside investors and domestic wealth creators representing together a somewhat extreme version of the liberal capitalist ethos. Therefore over the past 15 years or so Ireland has cultivated a wealth friendly ethos (as the cost of maintaining growth).

However this has been greatly at the expense of social justice. Though inequality was indeed worsening during the Celtic Tiger years, this could somehow be ignored as long as the greater mass of the population could aspire to an improved standard of living.

However now in the recession the patent injustice of what has been happening in our midst has become all too apparent.

Higher paid groups are intent on maintaining their great privileges (e.g. hospital consultants) while so many others desperately struggle to make ends meet. Meanwhile the Government in its attempt to reassure the "wealth creators" has immediately returned to its customary policy of appeasing them at every turn.

The clear implication of all this is that the very model of capitalism that we are now seeking to promote is proving itself quite incompatible with acceptable notions of social justice. One indication of how serious things have become is the threat of the police to go on strike action (even though this is illegal within their rules).

We are now facing a period of growing unrest and disruption that - if we are not careful - could spiral out of control into lower forms of social anarchy.

What we are actually seeing now is as Marx spoke about all those years ago "the inherent contradictions of capitalism". We are now facing growing global threats on many fronts e.g. financial system and the environment. Meanwhile social unrest is likely to grow in many countries.

In short we need a more integrated approach to economic life (where moral values are seen as inseparable from actual decisions taken). Unfortunately powerful vested interests are likely to resist this need for some time to come thus increasing the chances of truly enormous problems developing within the system.

Comments

Popular posts from this blog

Ireland in Transition

I was watching an interesting programme presented by Ian Kehoe (from The Sunday Business Post) showing how the recent resurgence in the Irish economy owes a great deal to a considerable amount of overseas capital investment, especially with respect to sales of distressed property. As is well known the Irish property boom came to a shuddering halt in 2008 leading to massive falls in value with respect to both residential and commercial property. Many of the largest loans on these properties were sold to NAMA (an Irish state organisation that has arguably now become the largest property company in the world). Likewise, many other assets however still exist on the banks' balance sheets, which they are anxious to sell to the highest bidder. And as Irish developers no longer possess the financial means, these assets are being quickly sold principally to the US (on both coasts) the UK and other international investors. Some of these assets have been bought up also by successful Ir

No Consensus

I was looking at Pat Kenny's " Frontline " Programme last night. It was dealing with the forthcoming budget and the need to achieve dramatic cuts with respect to Government expenditure. As things stand the deficit will be about €20 bl. with revenue set to exceed €60 bl. and tax revenue not much more than €40 bl. So this gross excess of expenditure over income is clearly not sustainable and therefore needs to be controlled. The audience was largely made up of public and private sector workers arranged in two separate groups. However it quickly became apparent that they were simply unable to address the overall financial issue. Everyone seemed completely locked into their own particular perspectives made even more rigid by a perceived sense of injustice with respect to the present situation. Therefore there was no appetite anywhere for either a reduction in Government expenditure or alternatively for further increased taxation (as a means of closing the gap). Based on the

Apple's iTax

The US Senate hearings on the tax avoidance activities of Apple last week places uncomfortable attention on Ireland’s relationship with this key multinational company. This followed a Public Accounts Committee into the affairs of Google who again are effectively using Ireland as a means of legally paying virtually no tax in the UK. And they are by means alone in this regard. For example an article in the Wall Street Journal back in 2005, highlighted the manner in which Microsoft used two subsidiary companies operating within a law firm in Dublin to again substantially reduce their overall tax liability. Then when questioning the extremely high cost of prescribed drugs In Ireland, one can also point to a growing concentration of the pharmaceutical sector. 9 of the top 10 multinationals are now in operation here with - I strongly suspect - tax avoidance on their global operations a major consideration. One of the key consequences of all of that due to a growing unhealthy level of dep