Before it went on holiday the government announced the stimulus package for the economy that many in opposition had demanded. An additional €2.25 billion is to be spent over the seven years to 2018 on roads, schools, a new college site in north Dublin, primary health care centres and Garda headquarters. The government claimed it will create 13,000 new jobs and is designed as a stimulus to the economy that will promote growth. Green Party leader Eamon Ryan got it right when he said the “plan is a throw-back to the last century when the only way Irish politicians knew of stimulating the economy was to pump money into the construction industry.”
Unemployment is 309,000 or over 440,000 if you include part time, seasonal and casual workers entitled to Jobseeker’s benefits or allowances. The stimulus will therefore not stimulate very much. The chief Economist for the Irish Congress of Trade Unions (ICTU) nevertheless said it was “an important step in Ireland’s recovery.” The Irish Business and Employer’s Confederation (IBEC) welcomed it in almost identical words saying it was “an important first step in helping to restore domestic demand in the Irish economy.”
The feeling of déjà vu became overpowering when the Minister announcing it, Labour’s Brendan Howlin, had to ‘explain’ why road projects were going ahead in his own constituency. His Department was also unable to provide a journalist with any cost/benefit analyses for individual projects, which are always nice to see even when they begin ‘once upon a time’. A commentator described one road project as “largely a vanity project” and that it “never added up even at the height of the boom.”
The money will come from what’s left of the National Pension Reserve Fund, so workers will know their future pension money is being craftily spent. Some will come from the European Investment Bank but it’s not clear how much. Some will come from the sale of state assets. This is where the state buys duff things from the private sector – like banks – which cost it a lot of money and sells good stuff – like companies that make profits – which also cost it money.
No spanking new construction project would be complete without the involvement of the banks and they too will be involved, although again it isn’t known by how much, but since these are funded by the State this doesn’t really matter that much. Finally, to complete the story, much use will be made of Public Private Partnerships, a partnership where one partner gives money to the other, for example when roads don’t have the traffic that was predicted but one partner gets paid anyway. Again we don’t know the figures but we’re not expected to get much exercised over this because it’s all for a good cause, although it’s the usual story of being bribed by your own money.
Fianna Fail complained that many of the announcements would have no effect for six years, which might have been a good thing had it applied to their own policies. They complained that some of the announcements were bringing back projects that the government had just cancelled, such as the Grangegorman project, which inspires confidence that planning by the capitalist state will continue to be used as a weapon to discredit socialist planning. The word planning might however be going a bit too far since Howlin said it would be nice to give the new jobs to people from the Live Register and also to apprentices who haven’t finished their training, but “I don’t want to promise that that can be done.” It’s wonderful how governments can promise to spend billions of workers’ pension and tax money while saying that they can’t promise that it will deliver what it’s supposed to deliver. The sense of building new health facilities while preparing to get rid of health staff and of building new college facilities while cutting the number of lecturers seemed not to have been questioned by many.
The Irish State doesn’t have a great record when it comes to investment. It bought 700 electronic voting machines for €55 million and they didn’t work. It wasted money on hospital co-location, decentralisation and €100 million on the ‘Bertie Bowl’. It commissioned a PPARS IT system for the health service with an original budget of €9 million in 1997 which ballooned to €120millin in 2004 before being pulled in 2007. The Auditor General reported that the roads programme which was supposed to cost €5 billion ended up costing €20 billion. The high-technology Media Lab Europe set up jointly with the Massachusetts Institute of Technology was to focus on the development of digital technology but went into liquidation within five years with consultants describing its output as “mediocre, “surprisingly weak” and “dismal”.
The United Left Alliance’s budget statement stated that “the current crisis cannot be resolved without a state led programme of investment.” It proposes a reversal of cuts in capital spending and an emergency state programme of infrastructure investment costing €26 billion to get 150,000 back to work. If we assume unemployment at around 310,000 this would still leave 150,000 unemployed. What happens to them? The programme is to last “for at least five years”. What happens after that? The economic contraction has already been going nearly five years and the slump could continue five more.
The ULA wants to employ workers’ private pension funds just like the government wants to use the pension funds of public sector workers. The ULA wants the latter money, €5.3 billion, to fund investment in modern industry and it rejects privatisation. Instead it wants state companies to carry out this investment. If successful this might make some further dent in the unemployment total and at the cost of job creation estimated in its infrastructure programme this would reduce unemployment by perhaps 30,000. Of course there would be further multiplier effects but this depends on the overall performance of the economy.
It is the assumption around this performance that motivates both the proposals of the government and the ULA. As we have seen, the bosses organisation IBEC, and also ICTU, see the problem as one of insufficiency of demand and the government’s stimulus “an important first step in helping to restore domestic demand in the Irish economy.” The ULA say “direct government job creation through public works is necessary to promote effective demand and halt the deepening crisis.” The government, bosses, trade unions and the left offers a similar analysis of the problem and a rather similar remedy. Of course the trade unions and left oppose privatisation but state ownership in itself is not socialist. What we have, as in the sphere of taxation, is a difference of quantity in the measures being proposed, not a difference of quality.
What the ULA proposes, based apparently on a Keynesian analysis of the problem, is not socialist although, if successful, would have a big impact on defending workers’ living standards by reducing unemployment and defending its welfare entitlement, take home pay and public services. Were its proposals to succeed they would go some way to providing a capitalist alternative to the policies of austerity although they would do little to prevent the regular future occurrence of capitalist crises.
Lest it be thought this judgement too harsh let’s go back to just one proposal of the ULA, that of using workers’ pension funds. This is a proposal that the capitalist state that has saddled the working class with an unsupportable debt and denuded its state pension fund, imperilling the pensions of future workers, should also take a chunk of workers’ private pensions, and it with its sterling record of investment and economic management. In effect it’s a capitalist expropriation of workers funds with no more than a promise from a politician for comfort, and a few Irish workers have had letters of comfort from the Irish State before.
The workers should take over management of their own pension fund? They should promote worker owned firms to address the problem of unemployment? Heaven forbid! That sounds like socialism.