New government for Ireland, but we really need new strategy
Today a new coalition Government takes office in Ireland following an election that was tantamount to a referendum on both the IMF/EU bailout deal and a severe austerity programme. To be blunt, both policies have failed. The former was designed to stabilise the broken Irish banking system and thereby remove the threat to the wider EU system. That hasn’t happened.
The austerity programme was designed to address difficulties in the public finances, caused by toxic bank debt and 15 years of neoliberal madness that saw the country’s tax base eroded to benefit the wealthy. But after four austerity budgets we now have higher unemployment, a bigger deficit and the return of emigration. It simply does not work.
We now have two failed strategies conspiring to squeeze all life from our economy and inflict profound, long term social damage.
Renegotiation of the IMF/EU deal is key to any prospects of future growth. Tinkering with the punitive interest rate will not solve the problem. Instead, we need to deal with the real elephant in the room: private bank debt.
It is both unconscionable and unsustainable that this enormous private debt has been hoisted onto the backs of the Irish taxpayer. Until that burden is substantially lifted, prospects for growth in Ireland will remain non-existent. And without growth, there is no prospect of any debt being repaid. To anyone.
Ireland has become the canary in the EU’s debt crisis coalmine, a testing ground for a bizarre ideological experiment. Meanwhile senior EU officials perform the political equivalent of sticking their fingers in their ears while singing ‘la, la, la, la…’
Unchecked, this will have profound repercussions for the entire EU project: is social Europe about to be sacrificed in favour of financial Europe?
While the new Coalition’s promise of a Jobs Stimulus programme is welcome, their insistence on adhering to broad IMF/EU targets prolongs the failed deflationary strategy and risks a worsening of the deflationary spiral.