July 2011        

Austerity is working!

The Irish Congress of Trade Unions recently published a paper entitled “Austerity Is Not Working.” The paper emphasises the deflationary effect of austerity measures, the suppression of domestic demand, and the effect on jobs that this regime is having. It correctly states that austerity will not assist Irish industry, it will not assist in creating consumer demand, it will not assist in creating jobs, it will not assist in increasing tax revenue, and in general will not assist an Irish recovery. All valid points.
     However, I fundamentally disagree that austerity is not working. I think it is.
     What is the austerity regime designed to do? Who does it protect and benefit?
     Austerity is not the mistaken policy of people who just don’t understand its impact. They understand very well its impact on people and its impact on the domestic economy.
     Austerity is a very clearly designed EU policy and programme, for very deliberate results. It is designed to free up capital in peripheral countries for paying the debt owed to core economies, to prevent the collapse of the euro and to secure the interests of monopolies throughout Europe.
     It is not designed to assist a recovery, or to create jobs in Ireland—in fact the very opposite: it is designed to facilitate a massive transfer of wealth from labour in the peripheral countries to capital in the core. Like a vampire, it will suck the life out of labour in the periphery to feed the core and consequently will suck the life out of any meaningful recovery.
     It is purposely enshrining the deficit-surplus imbalance that exists in the euro zone and is purposely turning peripheral economies into debt-servicing machines. They will cease to function as normal economies and will serve merely as recipients of loans from the surplus-happy core and payers of interest and debt back to the core.
     Peripheral economies are becoming revolving doors for the surpluses produced in core economies. This is EU policy, and it is working.

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