March 2012        

An austerity pact to fleece and rob the people

The Central Bank’s quarterly report exposes the train wreck that passes for the economic and social policy of this bankrupt Government and failed system. The system, both at the national and the international level, continues to fall deeper into crisis.
     The underlying factors driving the crisis cannot be solved under the existing economic system. The mounting payments to service the odious debt—which could cost the people nearly €9 billion this year, plus the payments to bond-holders due this year, coming to about €5 billion—are unsustainable. Economic growth is now forecast to be no more than 0.5 per cent; this is far below what the Government and all the establishment think-tanks believe is necessary to “pay our debts.”
     Though unemployment has not increased as dramatically as in early 2011, this is due to the emigration of thousands of talented workers, particularly young workers. And the Blueshirt minister for finance has described emigration as a “life-style choice.”
     The “austerity” measures now adopted will be carved in stone if the “Treaty on Stability, Coordination and Governance in the Economic and Monetary Union”—more accurately described by the People’s Movement as the Permanent Austerity Treaty—is adopted by this state, either by a vote in the Dáil or in a referendum.
     The austerity pact is a strategy for the permanent transfer of wealth from workers to monopoly corporations. Its purpose is to drive down workers’ incomes and living standards and to dramatically reduce “labour costs” so as to temporarily bloat the profits of corporations, nationally and globally.
     These measures and their effect on workers will not be confined to the indebted countries but will affect workers throughout the European Union.
     At the EU level, the political representatives of the monopolies are attempting to create the appearance that the “fiscal stimulus” faction has won over the austerity faction of monopoly interests. German manufacturing is suffering from the collapse in consumption, at home and throughout the European Union, and also from the effect of the austerity pacts imposed on member-states, particularly in the peripheral countries and Italy.
     They are caught in a double bind. On the one hand, under traditional Keynesianism the state was to provide stability within a volatile market system by being a stable purchaser of goods and a provider of stable employment and was also the engine of job creation in areas of the economy that private or corporate capital could not or would not invest in. This was to back up the interests of the monopolies with massive transfers of public wealth in the form of grants and other subsidies to monopoly corporations, big and small.
     But the “fiscal stimulus” that elements of the establishment, and elements of the left, are talking about has little in common with Keynesianism.
     They want to stimulate consumption by extending credit to an already over-indebted populace, getting people to spend while at the same time loading them with levies and taxes, both direct and indirect, together with cuts in wages and pensions and wholesale redundancies.
     Capitalism has already reached the point of over-production and under-consumption, and the markets are saturated, while the austerity pacts are for taking the state further out of economic intervention, for the privatisation of existing state assets, and for the further commodification of people’s basic necessities, such as food and water.
     This may well provide some growth for a brief period but will be done by means of an intensified exploitation of workers.
     So what they are left with is stimulating private corporations that have already reached the limits of production and personal consumption.
     In the context of this failed state, the payment of this odious debt piles more and more pain on the people while the Government and its EU allies attempt to deal with the massive socialised debt to save the German and French banking system. They have constructed a permanent debt relationship that will continue indefinitely, with massive transfers of wealth from the people of the peripheral countries to the finance houses of Frankfurt and Paris.
     Those who are attempting to break the debt into “ours” and “theirs”—Anglo-Irish debt bad, the rest somehow good—accept the underlying ideology that all or part of this debt is the people’s responsibility. This is nothing radical but rather left social democracy attempting to save the system from itself.
     The austerity pact will be a permanent policy and is a device for fleecing and robbing the people. It is to ensure that more of the people’s money will be spent on servicing a debt that is not theirs than will be spent on the people’s basic needs, such as decent health services and education.
     This debt and its repayment are the chosen vehicle of finance capital for the massive transfer of wealth from the people to the coffers of banks and finance houses. Repudiation is the only way to challenge the dominant economic and political powers.

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