The alchemy of modern political economy - turning private debt into public debt and austerity

Excellent post on Bright Green 'People economics: against the European austerity doctrine'. My quick comments on the back of reading it below:

Austerity driven responses to the financial mess is nothing short of simply 'displacing' private loses into public debt. What we're witnessing is a socialism of the rich - we're seeing the 'socialisation of risk' (through this displacement, now copper fastened by the European Commission's decision as you indicate in your post. But we're not seeing the socialisation of profit or benefit - that's still privatised! The transformation of private/banksters debt into sovereign debt is perhaps the nearest we have seen to a process of political economic alchemy – turning the dross /worthlessness of private losses into a publicly (tax-payer) backed but still privately owned income/capital stream.
This can be most graphically seen in the Irish case of the coalition government in September 2008 being forced with inadequate and partial information and the deliberate manipulation by the main banks operating in Ireland (which deliver revenue to banks and bondholders in Germany and the UK and elsewhere), to issue the bank guarantee scheme. The latter was the legal instrument by which the alchemy worked – transforming privately held debt into public, tax-payer backed debt, and kicked off the austerity drive in Ireland.

Another good analysis of the financial crisis in the Eurozone can be found here European Monetary Union: Muddling Through, Falling Apart, Going Where?

Where Next for the Greens in Northern Ireland?

I was asked to write a piece for Bright Green - reproduced here.


With forthcoming elections in both parts of the island of Ireland in early 2011 (Assembly and local elections in NI in May and a general election in the republic of Ireland, probably in March) it is timely to look ahead at what and where next for the Greens in NI.
It seems to me (and I write this in a completely personal capacity) that there are 4 issues which will figure large for the Green Party here in NI.

1. Establishing itself as a permanent political force within NI politics: the coming local and regional Assembly elections in May 2011, will be a real test for the party. It will establish whether the breakthrough of getting one MLA (Member of the Legislative Assembly) elected in 2007 (Brian Wilson in North Down) can be built upon and a green presence in the Assembly and local government be maintained. Brian Wilson will not be standing again and the party has wisely decided to put its limited resources behind the candidate chosen to replace him (Steven Agnew, European candidate from 2008, the party’s research officer, and the highest profile Green in NI). It is vital that the party keep the North Down seat since this is the best chance we have of electing another Green to the Assembly. There are other strong chances for the party – for example there is a strong presence in South Belfast – with Adam McGibbon as candidate there, another high profile candidate and elected member of Queens University Student Union, who should make a strong electoral impact, building on his excellent Westminster performance earlier this year.

2. Building the party at local level and connecting with communities: as the newest of NI political parties (in the sense of having an electoral presence), it is vital that the party increase its representation at local council level. This is for a number of reasons. The first is strategic and ideological – as a political movement based on bottom-up, grassroots democracy, the party needs to avoid being too ‘top-down’ in terms of having an unbalanced electoral profile. The party really needs an organic bottom-up, locally-focused development plan, selecting candidates and focusing on issues and areas that will offer Green Party representation for local communities and their issues. A second and relayed reason is that through greater local engagement, working with communities and local groups, the party can develop a ‘post-conflict’ analysis and agenda. The political conflict which has shaped and continues to shape NI politics is something that Greens cannot shy away from, and the best way of doing this is to engage more with communities and from that engagement develop and articulate what ‘green politics’ (and associated issues such as sustainability/and the transition away from unsustainability) means for communities (especially urban working class ones) who are coming to terms with the ‘post-conflict’ process in NI. Here key issues/questions are – how to connect the transition from unsustainability to issues of conflicting ethno-nationalist identities; can the party articulate a political analysis and vision that ‘connects’ with the ‘realpolitik’ of the hegemonic ‘nationalist-unionist’ dynamic?; can green politics be ‘indigenised’ in the sense of being a ‘normal’ feature of the NI political landscape? Indeed how can it portray itself not only as ‘normal’ but the natural choice for progressive voters? Some of the work on these issues have been done over the last number of years, but more is needed to localise and build the party and its political analysis and project as entrenched and enduring political presence in the tough political environment of NI politics.

3. Maintaining its distinctiveness : it is clear that as issues such as climate change and peak oil (usually of course translated into energy security) become mainstream political issues, there is a danger of Green Parties losing these policy/political issues as uniquely ‘theirs’. Even in NI, where our last environment minister (from the hardline unionist DUP) was and still is a prominent climate change denier, our most recent budget (ironically from the same DUP Minister who is now minster for finance) has flagged up the ‘Green new Deal’ as a key policy area for investment. In NI traditional Green Party policy areas have been adopted and adapted by local rival political parties (noticeably the constitutional Irish nationalist SDLP, and the ‘soft unionist/cross community’ Alliance Party). The Green Party in NI must (in my view) welcome the (late) adoption of Green policy by these ‘slow learners’ while pushing ahead in maintaining its distinctive approach to these issues. For example, the party needs to begin to question orthodox economic growth – largely unquestioned in most ‘Green new deal’ type proposals- and also the really attack the neo-liberal economic ideology underpinning the current economic crisis and also at the heart of all other political parties’ manifestos and policies.

4. All-island dimensions of the Green Party and green politics: the Green Party in NI is officially a ‘regional council’ of the Green Party in the Republic of Ireland (since December 2006), thus meaning that it is the NI branch of an all-island Green Party. At the same time the party has strong links to the Green Parties in Scotland and England and Wales and has signed Memoranda of Understanding with our sister parties to formally establish these important East-West links. These all-island and all-UK aspects of the Green Party in NI are work in progress and clearly there is more that could be done in terms of coordinating policy development, electoral support, media support etc. between the Green Party in NI and its sister parties in Scotland, England and Wales and the Republic of Ireland. The Green Party in Northern Ireland, like NI itself, is (in my view), the place where these ‘islands overlap’ and there are multiple benefits for all sister Green Parties of these islands in seeing NI as a place, an issue around which the uniqueness of a Green political vision can be articulated. Doing green politics in NI is like running on sand, given the legacy of the war and conflict and its outworkings. The creation and sustaining of a strong Green Party in NI will benefit all sister Green Parties throughout these islands, by acting as a key link between them all, and demonstrating how a shared green political perspective (often viewed as ‘fragile’ and ‘soft’ by some) can thrive and be relevant and take strength from its tough political surroundings.

Podcast of interview with me by Bob Hernan

Podcast of me being interviewed by Bob Hernan from Irish Environment

Rethinking economics - first workshop of new think tank

Last Saturday (27th November) I organised a workshop, the first public outing of a new think tank I've helped start - the Centre for Progressive Economics. The title of the workshop was 'The Global Economic Crisis: Analyses and Responses' and on a very cold morning around 30 people braved the elements to listen to three presentations and discuss ways in which the progressive left in general and the Trades Union movement in Northern Ireland in particular could beef up its analysis through engaging with university reseachers and becoming informed of the growing and existing evidence base for alternative economic analyses and policy prescriptions to the dominance 'neo-liberal' one.
The first presentation was from my colleague Andrew Baker who gave a wide-ranging, informed, incisive and provocatively entitled paper "Why Austerity is not commonsense but a politically driven nonsense". In his paper and subsequent discussion during the Q&A, Andrew systematically outlined and then demolished 5 'myths' that characterise the UK Lib-Con coalition's economic rationale and rhetoric of 'austerity' as the only policy option for the UK.
The five myths are
1. The country was on the verge of bankruptcy and risked becoming like Greece
2. Government debt is like household debt, or credit card debt. Like a household we have to balance the books and not live beyond our means as a nation.
3. Spiralling public debt is the result of 13 years of ruinous Labour spending and economic mismanagement.
4. Bond markets were demanding cuts in public spending and without them interest repayments on government debt would have spiralled out of control, choking off any prospect of UK economic growth.
5. Fiscal austerity is expansionary and will lead to private sector growth

The upshot of Andrew's analysis is that there is no economic rationale behind the drive for austerity, but rather represents a poliotically opportunistic attempt by the coalition to:

a) drive through deep public sector cuts now and blame the previous Labour adminstration on it, while the latter is still fresh in the public's memory. As Andrew puts it in his conclusion:

"The principal driver of the strategy is political opportunism and a concerted effort to pin the blame on the last government. This is the coherent thread running through the narrative the government are constructing."

and b) ferment/re-ignite class divisions and social tension. As he puts it
"Government strategy looks to be an effective way of fermenting class politics, social polarization and dislocation. "

Both the dogmatism around 'there is no alternative' to austerity and the deliberate creation of class tensions have obvious echoes of Thatcherism and its clear the Con-Lib adminstration is laying down a marker for how it wishes to proceed in 'remaking broken Britain', largely by breaking up the welfare state and immiserating millions with all the social costs of that, it seems.

Andrew's presentation was followed by John Woods (Convenor, NI Green New Deal group) who talked about a green approach to responding to the economic crisis. His presentation on ‘The Green New Deal in Northern Ireland’ outlined how this rather unique coalition of groups and organisations (from the Trades Unions to the CBI, Friends of the Earth, NICVA and the Ulster Farmers Union) have proposed job creating policies around the retrofitting of social housing, which also tackles fuel poverty and reducing carbon emissions. See here for the group's Housing proposals.

The final paper was from Andrew Fisher (Coordinator- Left Economics Advisory Panel) the title of which was "It’s the politics, stupid: ‘Responding to the UK Comprehensive Spending Review’" in which he pointed out the millions in unclaimed tax which could be used to address the fiscal problems of the British state, rather than attacking those on low income and welfare. Based on previous research by the Tax Justice Network he explained how the existing Tax Gap and Tax Injustice within Britain means that £120 billion in tax is lost, avoided or uncollected.

The final element of the day was a open discussion around the relationship between the Trades Union movement, progressive economics, academics and academic research. It was opened by Brian Campfield (NIPSA) and touched on issues around the research needs of the trades union movement, the importance of being briefed and up to speed on the latest research and the need for a focus on challenging the media's constant re-inforcing of the dominant neo-liberal line when discussing the economic crisis and Northern Ireland's response to it in particular.

It was a good start, the first of many and well done to all who participated and helped in its organisation.

It is hoped that the papers and presentations from the day will be put up on the Centre for Progressive Economics website soon.