Archive for April 8th, 2011

Seeing It Happen In Other People’s Lives

Last night I started to wonder what the likely consequences on the population will be once –if- austerity in Ireland becomes fully embedded as a fait accompli. While I’ve nothing but contempt for the present Irish government, I take no pleasure at all in the spectacle of the Irish parliament incapable of doing anything as a legislative body beyond ganging up on the population, mainly at the behest of the EU-IMF-ECB, but also in intense collaboration with the local power elites.

The most worrying question for me at this point is not whether the current government will successfully duck and dive to salvage this or that -most likely, some aspect of corporate taxation that principally benefits the US Chamber of Commerce- but whether the population, which needs an assertive labour movement, can mobilise against the deepening structural violence. If it does not, I fear the worst. We are not just talking economic collapse, but the complete collapse of democratic forms and full-blown corporate takeover. I’d much rather be able to say, “ach sure it’ll be grand”. But it won’t.

There has been no significant show of union strength since the ICTU march in November. And even that event, for the most part, had a valedictory feel to it: Labour was due to go into government soon, which meant there was a nice neo-liberal donkey for union leaders to pin tails and hopes on.

I wrote in the crisisjam piece last week about the need for the formation of new alliances that took into account the international character of the crisis. With this in mind, the ICTU meetings scheduled with EU trade unions certainly seem like a good idea. Now, I’ll be the first to admit that my knowledge of what goes on at high-level trade union discussions is up there with my knowledge of Malay dialects, but if you look at the content of what is up for discussion (or at least, what members are told is up for discussion) it is alarmingly bland, and seems to have internalised wholesale the grammar and vocabulary, if not quite the prescriptions, of neo-classical economic writing.

It is as though someone had been going through the Financial Times Lex column for bits and pieces on Ireland and cobbled a few of them together for a presentation. Can you imagine going to Germany and meeting with the unions and talking about how great it is that Ireland has the second most open economy in the world, as the list of talking points does, when big German unions have negotiated deals with their big export firms (Siemens, BMW, Daimler, ThyssenKrupp) to guarantee against job losses to overseas, and this in turn has contributed to a quick German recovery? It is enough to make you chew off and swallow your own fist in anger.

Anyway, with the whole international dimension to things still in mind, I thought I’d post a translation of a piece by Vicenç Navarro, Professor of Health and Social Policy at Johns Hopkins. His pieces are published regularly in Spanish in Público, and he has a lot of English language pieces on his site too. The title of the piece is ‘Recovering Democracy’, and the focus is Spain, which, post the neo-liberal assault on Portugal today is likely to be next on the hit-list.

I am not feeling so optimistic these days that I would set too much store by Navarro’s claim that popular mobilisation will occur if the people are given the necessary information to get indignant about things. But it is a necessary condition all the same. One of the things you notice reading pieces like these is just how goddammed familiar the whole thing is.

Like I was saying last week, because the focus of so much media coverage of the crisis in Ireland is in terms of national collective shortcomings and mistakes (which, naturellement, has to be remedied by the same power elites who brought about the crisis in the first instance: people like Gary McGann, former Anglo Irish director, current IBEC board member and the sort of person so riddled by sloth that whilst the bosses’ group of which he is a board member was calling for wage cuts he needed an extra 400 grand in 2010 just to haul his ass out of bed in the mornings.), it comes as something of a cobweb-blasting exercise to engage with how much reality over there overlaps with reality here: public spending slashed, below average levels of public spending in the first place, a tax-dodging elite that reproduces itself through state subsidy for its schools and connives with big banks to dispossess the majority of the population, government ministers who lay claim to social democratic credentials but obey the dictates of the markets. And, as Navarro shows, the solution is scarcely any different for Spain than it is for Ireland.

Recovering Democracy

These days we are seeing popular mobilisations throughout the world –from the Arab countries to Wisconsin, via the majority of countries in the European Union- that demand changes from the policies implemented by governments and states that appear insensitive to the desires of the majority of the population. In these demonstrations –despite the broad diversity of situations- there is a common element: protest in the face of an enormous concentration of economic and political power that inhibits democratic expression. And one example of this is Spain.

In Spain we can see the implementation, on the part of the State (both centrally and in the autonomous regions), of substantial cuts to public spending, including the social spending that funds transfer payments –such as pensions- and the public services of the welfare state such as health, education, home help for people with dependencies, nursery schools, social services, and others.

These cuts are markedly affecting the quality and coverage of such services, worsening the existing situation, which was already inadequate before the crisis began. Spain in 2008 was at the tail of the EU-15 for social spending. We spent on the welfare state only 19% of GDP (the lowest of the EU-15, whose average was 24%, whilst that of Sweden was 28%). A consequence of this is that only 9% of the adult population worked in welfare state public services (the average of the EU-15 was 15%, and in Sweden, 24%). The cuts taking place now are reducing even further such employment.

The power structure (which is based in 20-30% of the population, those with the highest income) does not appear aware of this enormous lag and underfunding, since it principally uses private services. They send their children to private schools (which receive the highest subsidy among the EU-15) and when they fall sick they go to private health care. This power structure (which has enormous political and media influence in Spain) promotes the message that there is no alternative to such policies of cuts. They argue that one must cut public spending to reduce the budget deficit and public debt, in order to calm the markets so that these will lend us money at reasonable interest rates.

This explanation, which on the back of having been repeated thousands of times has become a dogma, is profoundly wrong and it is promoted because it serves the interests of this power structure, which uses the pressure of the financial markets as an excuse to carry out what it has always desired to do. The data shows clearly that it is not true that in Spain there are not enough resources to fund a first class welfare state. Spain is not poor. The GDP per capita is already 94% of the EU-15 average, but the social spending per inhabitant is only 74% of the average social spend in the EU-15. If we spent what corresponds to us according to the level of economic development that we have, which is to say, the 94%, we would spend 80bn euro more, with which the enormous shortfalls could be covered. Spain, then, has the resources. The problem is that the State does not collect them. Instead of this, the State has been seeking loans from foreign banks, acquiring debt and scantily funding its welfare state. Spain, like Greece and Portugal, has very low tax receipts and a very high level of exchequer fraud. As was surprisingly admitted by a Deutsche Bank chief, one of the most important bankers in Germany, “there existed in the years of the boom an alliance between the most well-off classes of the periphery of the European Union, who did not pay taxes to the State, and the banking sector, which has profited from the low tax burden by lending money to the State for funding its social dimension.”

And there is the root of the problem. The power structure is not contributing to the State what it ought on account of its level of wealth. The manufacturing worker in Spain pays 74% of the taxes of the manufacturing worker in Sweden. The businessman only pays 38%. And, to make matters worse, the State has reduced taxes more and more, which has benefitted those on higher incomes above all.  The tax inspectors themselves have indicated there could be more than €38bn collected, focused on these sectors of society without affecting the tax burden of the majority of the population. The budget deficit could be reduced by raising taxes on these sectors instead of impoverishing the welfare state even further.

In reality, during the crisis the vast majority of the firms on the Ibex-35 have continued to enjoy large profits, with the Spanish banking sector one of the most profitable in Europe. Banco Santander has achieved €35bn in net profits (it is the most profitable bank in the world, after two Chinese banks).

These cuts in public social spending are being made despite the fact that the majority of the population is against them. It is yet another decision (another is the delay to the obligatory retirement age) which shows the enormous distance between those who govern and those who are governed. More and more, the political and media establishments that direct our country are imposing measures against the will of the citizenry. As a consequence, the population, in its indignation –which will occur if it is provided with information that questions the dogma that there is no other alternative- ought to demonstrate and engage in social agitation to bring democracy back to Spain.


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