Address to Congress Get Up Stand Up Demonstration
6 Nov 2009
We are here today in Dublin - and in seven other centres around the country - to try and persuade this Government of the folly of introducing a budget that will be so deflationary it could send the Irish economy into a prolonged coma.
This has happened before in the modern era. The Japanese experienced just such a slump in the 1990s when they made the very same mistake our Government seems intent on repeating. And every effort they made later to try and reflate their economy failed. For good reason it is known as Japan's Lost Decade.
We had an interesting visitor to our shores earlier this week: Professor David Blanchflower specialises in labour economics and is a former member of the powerful Bank of England committee that sets UK interest rates.
Professor Blanchflower is probably unique among practitioners of the 'dismal science' - he is known as 'the man who saw the global crisis coming'.
You would expect therefore that his views would carry weight. In a radio he was asked about our own Government's plans - to cut and cut and then cut again.
He said: "That is the way to create more unemployment........it is very easy to turn a recession into a depression."
It is worth recalling how we got into this mess in the first place.
My esteemed predecessor, Peter Cassells, featured on a recent Reeling in the Years programme on RTE. The year was 1999 and he was speaking about what we now know as the Ansbacher Affair and warning that such sharp - and crooked - activity never be allowed happen in our banks again.
But it has happened again.....and again....and again. The peculiar variant of crony capitalism that flourishes here has dogged our development as a nation, undermining our society time after time. At least with Ansbacher we eventually got to the truth but with Anglo Irish Bank - one year on - we do not know the full involvement of the Quinn Group or the role of the so called 'Maple 10'. The three investigations seem to be moving at a snail's pace.
But for staff of the bank - who played no role in this mess - the impact has been far swifter and far worse and is seen this week in the loss of several hundred jobs.
And for the rest of us, there is a bill of €54 billon for NAMA that will be presented to us on Budget Day.
We are in a bad, bad space and there is no pain free way of getting out of it. But there is a better, fairer way of doing so, if the Government is just willing to listen.
Consider what they are planning.
There are two essential pillars. The first has the goal of reducing our borrowing requirement to 3 percent by 2013. And that starts with a €4 billion cut in public spending in this budget.
But there is something funny going on here. Last April, the Government stated that it would find the €4 billion by way of tax and cuts - they had pencilled in about €2.5 billion by way of tax increases.
But this plan has ceased to exist. It was dropped without comment or complaint. And that is a testament to the huge influence of the rich and powerful in this country. They knew the taxes were for them, they saw them off.
The second pillar of public policy is dressed up as a device for fiscal correction, but in reality is a desire to impose pay cuts: on public and private alike. And cutting the minimum wage and social welfare rates is central to this.
The problem with both of these is that they will impart a severe deflationary shock to the economy, probably driving it into a long term slump. And if that happens we are in deep, deep trouble.
Congress has an alternative perspective, as reflected in our 10 Point Plan for a Better, Fairer Way.
It is intended to give us the breathing space that will allow us to deal with unemployment, with people in danger losing their homes, with collapsing private sector pensions.
In other words, it will give us the chance to deal with the social consequences of this recession, to attend to peoples' needs.
It our view is that there are five levers available to Government: public expenditure, taxation, borrowing, time and economic growth We must use all of them. Confining ourselves to expenditure cuts only risks unraveling the very fabric of society.
That is why we want to extend the period in which we have to make this adjustment to 2017.
This 10 Point Plan for a better fairer way has provoked the ire and anger of the entire establishment. In recent days we have been attacked from every quarter including the Central Bank, the ESRI, the chattering commentariat that takes up far too much space in our media.
But the most raucous reaction has been from the dominant 'neo-classical' (neoliberal) school of economics.
Perhaps the explanation for this hysterical reaction is that we reminded them that the God of free market fundamentalism they worshipped has feet of clay and is no more.
Many people agree with us. Such as two Nobel Prize winning economists: Joseph Stiglitz and Paul Krugman. They say Government is wrong and we are right.
And even some who are 'not of this parish' agree with us:
President Sarkozy agrees;
The UK Treasury agrees;
The right wing Bruegel Group agrees;
The Financial Times agrees;
The Economist magazine agrees.
Could it be that what really bothers our opponents most is the possibility that we are right?
I must say, the coarseness of public debate since this recession began is to be regretted.
It reminds me of a rhetorical invention perfected by Ronald Regan when he ran for President in 1980. He told the story of a 'Welfare Queen' who was getting $150,000 tax free every year from the state, through scams and fraud. The story was fiction but it created a popular middle class backlash against the poor.
And this device of the 'Enemy Within' was used later used to great effect against the unions by Margaret Thatcher.
These days, the 'Enemy Within' in Ireland is the public servant. You would sooner admit that your father was in the Black and Tans than admit to being a council worker, a school secretary or a nurse.
The principal objective here is to split public and private workers. And it would be foolish of us to be distracted by this because:
.......no one is an Island;
.......families have members in both sectors;
and
.......if they succeed in cutting public sector pay rates it will be almost impossible to resist it across the private sector.
We are confronted with the choice between taking a brutal cut of €4 bn up front or trying to effect a more gentle adjustment over a longer period. We know for certain that the first option risks collapsing the economy and is a guarantee of more job losses.
Our alternative at least offers the possibility of preserving the social fabric of this society.
David Begg, Congress General Secretary
Dublin, November 6, 2009
ends
