A socialist programme for economic recovery

The premise of Fine Gael and Labour’s Programme for Government is that there is no alternative to continuing the austerity policies of Fianna Fail. socialistparty.net questions this assertion and argues for socialist policies to redevelop the economy.

The purpose of the “we are where we are” mantra of the establishment is to let those responsible off the hook and focus minds on the “need” to slash public expenditure and implement stealth taxes to close the €19 billion gap between government income and expenditure. But answering why “we are where we are” is essential to understanding what sort of radical policies are needed now to redevelop the economy, improve living standards and avoid further crises.

A number of years ago, the government had a surplus on a yearly basis – income exceeded expenditure. The reason income collapsed was because of the collapse in the property bubble, which had been relied upon for taxation, the disastrous guarantee by the state of private banking debt and the mushrooming of unemployment as a result of the crisis.

The imposition of €9 billion worth of cuts then deepened the crisis dramatically. The solution is therefore not more austerity but tackling the issues that led to the crisis – the guaranteeing of the debts of the banks, massive unemployment and a system which encourages speculative bubbles.

Stop the bank bailouts – refuse to pay the speculators

The government in the coming weeks will invest another €10 billion in shoring up AIB. This money, like the billions already invested in the banks, will end up in the pockets of international investors and speculators who gambled on Irish banks and lost, only to find that the government was willing to make taxpayers foot their losses.

The Socialist Party calls for no more bank bailouts – the state must refuse to pay the debts of the private banks to the investors and speculators, while guaranteeing the deposits of the working and middle classes.

State investment to create jobs & eradicate unemployment

The starting point for a real redevelopment of the economy has to be getting people back to work. Each unemployed worker costs the state around €20,000 a year in social welfare expenditure and lost tax revenue. That does not account for the waste of talent that could be producing wealth and developing the economy.

The approach of the new government is to encourage the private sector to create jobs – blind faith in the free market meaning they ignore the fact that major corporations in Ireland over the past two years have proven themselves unwilling to create jobs. Instead, in the pursuit of maximisation of profits, jobs are still being shed, with some multinationals like Dell moving eastward in the pursuit of cheaper labour.

What is needed is a massive job creation programme led by the state to get people back to work. In the first instance, the 100,000 unemployed construction workers should be employed to build necessary and useful infrastructure – developing broadband across the country, fixing the ancient leaky water infrastructure and building schools and hospitals. A 35 hour week, with no loss of pay, should be introduced, creating up to 150,000 more jobs by sharing out the work.

Use the wealth to benefit society

When the mouthpieces of the establishment ridicule these socialist policies, declaring that “Ireland is broke” (conveniently forgetting that another €10 billion can be found to shore up AIB!), what they actually mean is that the massive wealth that does exist in Ireland is untouchable – because it is owned by major corporations or rich individuals.

Here are a few examples of what could be done. A doubling of the corporation tax rate would yield almost €4 billion extra. A 10% wealth tax on the multi-millionaires would yield in excess of €10 billion. Nationalising the gas and oil fields off the west coast of Ireland would mean the state taking ownership of resources worth over €500 billion. Ultimately, all of the massive wealth that is currently in the hands of a super-rich elite should be used to provide for the needs of society.

A democratic socialist plan for the economy

Fundamentally, it is capitalism that created the crisis that working people are paying for. It was the private pursuit of maximum profits by the developers, speculators and bankers that led to an unsustainable construction bubble in Ireland as well as the international economic crisis. This failed system must be replaced.

Through taking the key sections of the economy – the natural resources and the major companies and factories into democratic public ownership – instead of an anarchic rush for profit which results in boom and bust, a sustainable economic plan could be developed.

A crucial part of this plan would be the development of real wealth creating industries in public ownership, rather than having a primarily service-based economy. Through significant investment in Research & Development, a modern manufacturing base could be developed in Ireland that would provide a sustainable basis for economic growth and rising living standards.