From Socialist Voice, March 2010

A democratic alternative economic policy

. . . There’s a large mustard mine near here. And the moral of that is—“The more there is of mine, the less there is of yours.”—The Duchess in Alice in Wonderland.

Unlike the Lewis Carroll character, an unconvincing editorial-writer in a recent edition of the Sunday Business Post (28 February) still tried to peddle the nonsense that policies that are designed for bankers, shareholders, speculators and bondholders are really also in the best interests of the 13 per cent unemployed, or workers suffering from drastic cuts in living standards and an ever-present threat of losing their jobs.
     Thousands of Irish businesses and households are today being starved of credit by the very same banks for whose benefit generations of taxpayers will be condemned to a 21st-century form of financial feudalism.
     The editorial was prompted by the shenanigans of George Lee, Deirdre de Búrca, Willie O’Dea, and Trevor Sargent. But the editorial-writer warned readers not to be “distracted by political sideshows” at a time when “the state is facing decisions of crucial importance to all our futures.”
     The editorial listed three “decisions” awaiting Government attention: the “reorganisation of the public services,” “job creation strategies,” and getting “our banking system back to some kind of normality.”
     The core of public service “reorganisation” is the McCarthy proposal to cut 17,300 jobs as part of a cost-cutting exercise. Interestingly, David Begg of the ICTU, being interviewed on 28 February, seemed to focus only on the time scale involved for these “cost-cutting” measures, rather than opposing them in their entirety.
     The editorial portrayed the NAMA “decision” as the key. Even what was described as “the development of yet more new visions for job creation” had to remain as mere distractions until NAMA became fully operational.
     The editorial conceded that the NAMA process obliged taxpayers “to buy a pig in a poke”; and even then the best we could expect would be that the Government and NAMA would ensure that “we are not being exposed to too much risk.”
     But even then NAMA will not get credit flowing, because this would require a massive recapitalisation of the banks.
     In 1976 the Communist Party, the Liaison Committee of the Labour Left and Sinn Féin presented a Left Alternative programme to address the economic crisis then facing the country, which had 200,000 people unemployed, north and south, with thousands more under threat of unemployment and poverty and with the remaining work force facing declining standards of living.
     The alternative envisaged “an alteration of the control levers of fiscal and economic policy. Instead of having the State sector, taxpayers’ money and State policies propping up the private sector to the exclusion of all other activity, the Left Alternative is to allow the State sector stand on its own and to develop to the maximum the resources of the country both natural and human in order to maximise employment, win socially desirable aims and ensure economic well-being.”
     Today’s “Democratic Alternative” economic policy would have as its central aim the freeing of credit to normal Irish businesses and households, without expecting taxpayers to protect bank bondholders and shareholders from the results of their feckless past lending and improvidence, through the establishment of one or more “good” state banks that would be set up from scratch to take over the essential function of providing credit. Ireland has had state banks in the past: the Industrial Credit Corporation and the Agricultural Credit Corporation.
     The new “good” bank could be capitalised by public money as well as the now state-guaranteed deposits in the existing private banks. The “good” state banks, free of the dud and overvalued “assets,” could take over the buildings and much of the staff of the existing banks to administer the new clean banks, and the state could withdraw its guarantee of the liabilities of all existing banks, which is up for renewal again in September but that it was folly to have agreed to in the first place.

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