Wednesday, February 29, 2012

Could Irish Voters Scuttle Europe's Austerity Madness?

The Irish public may be charting the next round in the battle over European austerity politics.   The coalition government in Dublin reluctantly yielded to overwhelming public pressure demanding a referendum on the latest Eurozone fiscal treaty.

Former Citibank senior international economist Michael Burke writes that angry Europeans are turning on their austerity-minded governments and with good reason.

It is hardly surprising that "austerity" is unpopular. It is nothing other than a transfer of incomes from labour and the poor to capital and the rich. One of the greatest fallacies of the current crisis is that "there is no money left". This is wholly untrue. Companies are sitting on cash mountains all across Europe. And the profit share of national income has risen. This is why stock markets are rising – corporate incomes (profits) are rising.

In some cases, such as Ireland, the total level of profits is rising, even while household incomes are declining and the slump in business investment actually exceeds the total contraction in GDP.

 All recent history suggests that Irish voters will come under intense pressure to vote yes. They will be accused of wrecking the euro if they vote no, and that all sorts of calamities will follow.

But those wrecking the European economy and potentially the euro are the politicians who allow capital to flow freely within the eurozone when it is allocated by bondholders, and refuse to allow the state to reallocate capital on the basis of what is economically rational. return for bailing out Greece's creditors, the troika of EU, ECB and IMF insist only on more austerity, that is, more transfer of incomes from labour to capital. The treaty provides a clampdown on "structural deficits" whose nebulous existence allows unelected technocrats to impose any cuts they can get away with. Of course this will apply to all countries adopting the treaty. In this way, "austerity" will become the norm in the core as well as the periphery.

Yet these policies clearly aren't working and now the talk is of setting Greece loose, having imposed a policy of reparations that harks back to Versailles.

If Irish voters do reject the treaty, they will be performing a great service to the population of Europe. It could mark a turning point in the EU and beyond, pulling the brake on the austerity express before it hits the buffers.

...In Ireland, political circumstances mean there is a possibility of a real political blow against the disastrous and undemocratic policies that have been pursued since the crisis began. A yes vote means the continuation of the nightmare. A no vote would be a blow in favour of all the victims of austerity and for all democrats across Europe.

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