Dublin Opinion

John Green of Counago and Spave has linked to the Naomi Klein article ‘All of Them Must Go’ that was published in the Nation and The Guardian a while back.

They shouted, “¡Que se vayan todos!” (”All of them must go!”) and forced out a procession of four presidents in less than three weeks. What made Argentina’s 2001-02 uprising unique was that it wasn’t directed at a particular political party or even at corruption in the abstract. The target was the dominant economic model–this was the first national revolt against contemporary deregulated capitalism.

However, although I had read the article before – in the Guardian – I decided to read the Nation version this morning. While doing so I realized, towards the end, that I was reading a paragraph I hadn’t seen before – it was omitted from the Guardian one. Not surprising, as it’s a shortened version.

Here it is:

Here in Canada, politics is markedly less YouTube-friendly–but it has still been surprisingly eventful. In October the Conservative Party won national elections on an unambitious platform. Six weeks later, our Tory prime minister found his inner ideologue, presenting a budget bill that stripped public sector workers of the right to strike, canceled public funding for political parties and contained no economic stimulus. Opposition parties responded by forming a historic coalition that was only prevented from taking power by an abrupt suspension of Parliament. The Tories have just come back with a revised budget: the pet right-wing policies have disappeared, and it is packed with economic stimulus.

‘What?’ I thought, ‘Naomi Klein’s Canadian??’

No, no, that’s not true. What I thought was the idea that the conservative Canadian government tried to deal with their economic situation without bringing in a stimulus package. Then, when a severe political crisis ensued they changed their mind. In Ireland there is very little discussion of the need for economic stimulus in the mainstream press, except through pay cuts and tax increases. When it is mentioned, for example, in the ICTU 10 point plan orthodox economists cue up to piss all over it, citing Ricardian Equivalence along with a blizzard of other buzz words which leave most people’s head spinning.

The only well-known economic commentator to give the idea of stimulus any weight is David McWilliams, who is then dismissed by the orthodox bunch because of his suggestion that Ireland should leave the Euro. But there is no doubt that McWilliams is right about the foolishness of contracting a shrinking economy further. All movement now seems to be to cut wages, increase taxes and reduce capital investments, all of which is argued for by citing Ireland’s inability to pay for huge levels of borrowing. But is this really a problem? Michael Taft, of course looks beyond the rhetoric to see what the situation is with regard to borrowing and says that there is now a line in the sand between those ‘who want to deflate the economy - cut it and trash it - and those who want to stimulate it, reflate it, grow it. That dividing line could throw up all sorts of new, curious, if only temporary alliances. But this is the new line in the sand and the Left should work with all those on the progressive side.’

So, McWilliams is on the stimulus side, so his latest SBP column makes interesting reading:

‘I am now about to do an unfashionable thing, I am going to make the case for dramatic income tax cuts…’

Which doesn’t sound very progressive, until that is, you read the rest…

“… offset by property taxes and an expansion of moribund monetary policy through mass debt deferral.

We shouldn’t worry our heads about the implications of this idea, because, if we believe in the logic of monetary union and the irrevocable nature of the euro exchange rate, we should not be too concerned about how big the budget deficit is, or our ability to finance it - because it will be financed.”

McWilliams argues that the economic consensus is dominated by the fundamentalists, those who are constantly invoking ‘the fundamentals’. “In the boom, they told us the fundamentals were strong. Today, in the bust, they are telling us the fundamentals are weak.”

They were wrong before, and they are wrong again. What is needed is a radical plan:

…to introduce debt deferral for hundreds of thousands of mortgage owners who are in negative equity, and use this debt relief as traditional monetary policy. Debt deferral gives hope and - most importantly -it injects liquidity directly into people’s pockets.

….to cut income taxes, raise property taxes, cut all tax incentives to property and use the money saved to give grants to companies that are employing people.

… to accelerate the new euro-wide bond initiative and use it to borrow heavily.

Of course, the idea of cutting tax is to put money back into the economy, not to just give ‘incentives’ to the rich and hope that somehow the extra cash they get to keep will trickle down to those further down the economic food chain. Normally, this is what tax cuts means. But in an economic crisis the idea is that you only tax unproductive capital, the money that doesn’t feed into the economy in order to avoid further deflation. At least I imagine this is what McWilliams is about – apart from a property tax his suggestions don’t address the inequity in the tax system.

But whatever about the finer detail he is right about not letting those who claim that we can’t borrow prevent us from looking to grow the economy. The EU is already looking at providing lines of credit to countries as part of a stimulus initiative.

Curiously, the baseline scenario post which I have linked to above was also linked to on Irish Economy. No comment was made about the idea (positively or negatively) of a European Stability Fund, and no one left a comment either.

Wherever Simon Johnson lives he is considered too far away to piss on.

*****

While riffing on the word ‘radical’ – not that I was but no one is going to read this anyway…

In his Leaders speech at the Green Party conference this weekend John Gormley said that the Greens needed to be radical, but radical did not mean ‘extreme’ – rather it was a matter of going back to basics. While in opposition the Greens used to call for the implementing of the Kenny Report when criticizing how developers were profiting from land speculation. During his speech Gormley said that the Green never received a cent from bankers or developers (unlink FF, FG and Lab). Good for them. But if they are serious about going back to basics surely Gormley could have announced that as Minister for the Environment he has taken the ‘radical’ decision and pushed for the implementation of a report that has been sitting on the shelves since the 1970s and which has been ignored by every government since it was published.

Just a thought. Right, I’m off to refine my conspiracy theory to explain why that paragraph was omitted from the Klein piece in the Guardian.