Social Consequences of Austerity Livestream

Is here, questions on this blog, or at the hashtag #ausconf, may come up in the conference as well.

By Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

58 replies on “Social Consequences of Austerity Livestream”

Before speaking about “austerity” could each speaker provide a definition?

Marks will be deducted for copying what that other guy said, or coming out with something along the lines of “I agree with Nick”.

So you’re insisting that each speaker provide a definition that differs from those provided by others? And then, I imagine, you’ll fault them all for being inconsistent among themselves. Wow.


I really recommend Mark Blyth’s Austerity: The History of a Dangerous Idea on this, it is a cracking read and the most coherent and least judgemental explanation of the GFC I have read – all of the recent material would be familiar to you but you would still enjoy the intellectual history bit. Goes well with Corey Robin’s much less fun The Reactionary Mind.

As to defining austerity there is not a short answer but if you think about it as being more about being a political movement with goal of a minimal state rather than as a response to economic circumstances it helps. Austerity is the process of shrinking the state and the reason it happens in economic crises does not have a primarily economic (or even fiscal) justification – it is just than austerity is not democratically feasible at other times.

It is all very German.

@Ernie Ball

@grumpy seems like a reasonable guy to me and he knows useful stuff.

I know, I know – its weird and hypocritical to hear a request for civility from the team of patients who post under my name but I really do not think grumpy deserves you anger.

Also, read the Blyth book if you have not already – its the equivalent of a great beach read in popular economics.

Re: Question from Engineer on 300,000 empty dwellings in Ireland

What I always say, is that the ‘program’ for development of Dublin as a viable economic centre in the 21st century is basically done. Give it it’s own elected Mayor and allow Dublin to get along with its business as a City State, within the State of Ireland almost.

Then you move the Dail and its members to Athlone, or the centre of Ireland, and you get those Dail to concentrate on developing the other parts of Ireland, that haven’t achieved sustainable economic viability, during the last century.

And in due course, when we have about a quarter of a million people in both Cork and Limerick, you start to look at those becoming their own city states in due course as well. You make them semi-autonomous.

Couples shouldn’t quite give up the ‘dream’ of owning and living in a semi-detached house. But they should be able to do it in a city other than Dublin city. They should be able to do it in Limerick, Cork, Galway and several other urban centres (that ‘hub’ in the middle lands for example, where I would situate the new Irish parliament).

This would feed in too, in due course, I think to the idea of an ‘All Ireland’ parliament, which could administer a lot of things in both north and south.

For instance, Belfast again would have its own Mayor and its own local elections.

We need to allow these cities to get on with it though, free from overbearing influence from national politics, . . . and the cities in Ireland become destinations in their own right, within the greater European context. Which is exactly what we saw in Dublin during the Celtic Tiger, . . . where a huge portion of our ‘labour force’ in times of full employment, came from outside the country.

And let’s face it, that when the economy in Ireland starts to achieve its full capacity, . . . it always gets starved of workers, and that becomes the bottle neck. We very quickly run through the couple of hundred thousand unemployed, and find ourselves short of workers, to keep the economy growing.

So cities in Ireland – Dublin, Cork, Limerick, need to begin to see themselves – as autonomous, and free from over bearing tampering by national politicians. Irish cities, starting with Dublin, need to think of themselves as a part of Europe, rather than as a part of Ireland.

The Irish national government could then get on with doing what it should be doing, . . . which is helping to develop parts of Ireland, . . outside of the major cities (where these 300,000 empty houses exist, as the Engineer from University of Limerick mentioned).

The problem is, none of the empty units are in Dublin, . . . and Dublin as a ‘destination city’, within Europe is the only economic generator on the island of Ireland at the present. Dublin gets on with its business, with or without national political interference, . . . and Kildare Street Dail members usually just ‘ride on the coat tails’ of the Dublin city innovation and enterprise anyhow.

That’s bad for national politics in Ireland, . . . because national politicians, focus on the success of Dublin, as a European city, and ignore the remainder of the country.

All parents of kids in the remainder of Ireland, tell their kids, there’s nothing for you here, go off and go to England, or Dublin, . . and parents who vote for FF/FG, have been telling their children that in Ireland for far too many decades.

And this is why we have 300,000 empty homes in Ireland, and that’s the real reason. And University of Limerick haven’t been vocal enough about this fact either. We always produced children for export, in most parts of the island of Ireland.

This is why Sinn Fein politics is becoming so strong too – because it is only one who tries to offer an all Ireland solution (not just north and south, but also urban and rural.) BOH.

“Austerity” seems to have become a kind of ‘catch-all’ word meaning different things to different people. I think it does genuinely mean different things to different people.

Personally I think its use is borderline unhelpful, so defining your terms is required.

Anyway Ernie, I’m going off in a huff now. Maybe I should switch over to being unfeasiblycharming.

Following the ~#ausconf on twitter. I really, really, wish I was there – it sounds invigorating. Well done Mr Kinsella.

‘Austerity’ is ensuring that the majority of citizens in an economic region endure economic and social deprivation so that outdated economic theories of national book balancing become doctrinaire and are applied to ensure that the wealth, powers, positions and privileges of ruling political, administrative, financial and professional elites- along with their fellow travelling vested interests – are at least maintained and where possible, enhanced, subject to testing the limits of social cohesion … ‘

Re: Irish Society has never re-discovered any confidence in itself, since the 1950’s

What we hear about in the media, in recent weeks after the European and local elections, is that the ‘old guard’ in Irish political parties need to move on. This is what we are hearing in the competition for the leadership of the oldest political party in Ireland, the Labour party.

What do the ‘old guard’ all have in common?

Many of them were born in the 1940’s or early 1950’s, and grew up in the 1950’s and 1960’s. They purchased homes, got married and settled into jobs in the 1960’s in Ireland. The ‘old guard’ as they are termed, today in Irish national politics would have been heavily affected by the context of their youth growing up in the 1950’s in Ireland and witnessing the emptying out of so many urban and rural communities in Ireland from emigration.

This is important I think, because following the gaining of Irish independence in the 1920’s, already in the 1950’s the experiment had failed.

The model of the 1950’s in Ireland (and it is the one that the ‘old guard’ in Irish politics were familiar with growing up), was that one cashed in one’s chips in Ireland, and invested in one’s future, by re-locating to some other part of the world.

But the world of the 1950’s and 1960’s was different. There was huge economic growth and expansion. Without any great skills, one could easily exchange one’s place in Irish society, and trade it in for a place in some other one.

Fast forward to the 1980’s, and what got developed and executed in places like University of Limerick, was the ‘2.0’ version of the 1950’s plan. Where, instead of young people leaving Limerick, without skills, they left with qualifications, training and degrees. But apart from that, it was still the same model.

You can see it in evidence in cities such as Cork and Limerick. These cities still, in 2014 have only a little more than a 100,000 inhabitants in them. The fact that this is so, should tell us all quite a lot about national politics in Ireland.

Cork and Limerick should easily be able to double their populations (and provide sustainable livings for that amount of people) – and if we can’t do this, then it would be a real tragedy.

The context of the global economy in the 1980’s, when University of Limerick started, was different from the one today. Again, the 1980’s was a time, where one could trade in one’s chips in Ireland, and cash them in somewhere else, and expect a much better future. So the modified 1950’s model of emigration, the 2.0 version of the 1980’s did work extremely well.

Fast forward to the present day, . . . and many places in Ireland, University of Limerick included, are trying to understand what the ‘3.0’ version ought to be.

What I have described above, in my initial comment, is something like what the ‘3.0 version’ should be. We are in a context now in 2014, where it is not so advantageous any longer to re-locate to different parts of the world (with or without skills), and assuming that one can ‘get in’ anywhere for any length of time. But what we are seeing now, is that cities within Europe have become destinations for all the people of Europe.

This is the sort of thing that we have to think about, in trying to develop a ‘3.0’ model for Irish citizens. The reason, why this ‘3.0’ model is difficult for people in Ireland to understand, is because it doesn’t involve people jumping on to boats like in the 1950’s model, or on to planes like in the 1980’s model. Instead it involves people from abroad, coming to destination cities within Ireland.

But you can actually see the incubator version of it in University of Limerick already even. You can see people from Scandinavia arrive into Shannon airport, in order to do their jobs at University of Limerick. The problem is, is that our ‘3.0 model’ is still only an incubator. To put the plan into full force, would involve the doubling in size of cities such as Cork and Dublin.

The ‘old guard’ in Irish politics, who grew up and understood the ‘1.0’ and ‘2.0’ models of the 1950’s or 1980’s, . . . sort of cling to the present success of the high tech economy in Dublin, . . like a dead man clinging to a blanket. Irish society never properly recovered in the aftermath of the 1950’s. We don’t have a national politics in Ireland, who can ever conceive of a future like the one I describe for cities such as Cork and Limerick. Their imaginations, which were first molded all the ways back in the dark 1950’s in Ireland, just can’t stretch quite that far.

What we witness today in Cork or Limerick, is the result of several decades worth of policy of the national governments in Ireland, which reduced these cities down almost to 100,000 inhabitants, who struggle very badly even now. Several decades worth of scarcity and under-development. These cities have made austerity in to a way of life. The latest wave, is nothing new at all.

The world was the way that it was in the 1950’s or in the 1980’s, and that dove tailed with the ‘model’ for Irish society, that we saw in the 1950’s and the 1980’s. The world we have in 2014, is the world we have in 2014. And places such as Cork or Limerick are still only about half the size of one of the 32 boroughs in the city of London for example. That is, both Limerick and Cork city together would fit into one borough in the city of London.

And it is cities like London, and several others, throughout Europe today, which are the generators of economic wealth and prosperity. We have decades worth of stagnation and neglect to catch up for, in the regional towns and cities in Ireland. But that is not going to happen, unless we get a different perspective from that one, which the ‘old guard’ had all grown up with and internalized. BOH.

Austerity means persistently reducing State spending in the face of a pronounced output gap.

Re: Put it another way

I mean, just to put it in another way, a much simpler way. When you look at cities like Cork and Limerick (and many other regional towns or urban areas), what you are not seeing is people, . . . but the absence of people.

One of the speakers in the debate spoke about the loss of a rape crisis centre, in Limerick city.

But to put it very bluntly, there isn’t much more that one can do to places such as Cork city or Limerick city, . . . that hasn’t been done to those places, over five or six decades already, . . . by numerous nationally elected governments since the 1950’s.

That is the fact of the matter.

These cities have made starvation and deprivation and austerity into their modus operandi. It is the way of life. The present government in Ireland, can’t do much more to those places, than other governments haven’t already successfully managed to do over decades.

When I finished my Leaving Cert examinations in county Limerick in 1992, half of my class were in England, before the results had even come out. Places like Limerick have always been that way. You might ‘go to school’ there, or go to college etc. But you don’t stick around. You only have to look at the population figures today, to understand the end result of that policy over decades.

This is what annoys me most of all about the present conversation about ‘austerity’, like it was some new thing. It might be a new thing in some parts of Ireland, or some parts of Europe. But it has been the standard procedure in many Irish towns now, for decades. BOH.


I like this pithy and prescient passage from the Mark Blythe book:

“In sum, when those at the bottom are expected to pay disproportionately for a problem created by those at the top, and when those at the top actively eschew any responsibility for that problem by blaming the state for their mistakes, not only will squeezing the bottom not produce enough revenue to fix things, it will produce an even more polarized and politicized society in which the conditions for a sustainable politics of dealing with more debt and less growth are undermined. Populism, nationalism, and calls for the return of “God and gold” in equal doses are what unequal austerity generates. . .

@Brian O’Hanlon….
Your point about ‘people not sticking around’ is valid and has been a plank of economic policy in this country since the foundation of this State.
That ‘plank’ is rarely spoken about or admitted to in public- more a whispered topic for conversation within and between the various ruling elites.(Occasionally there is an outburst about the necessity for inequalities and ‘the fact’ that there just is not room on this small island for the general population to thrive economically- better to have the ‘pressure release valve’ of emigration ‘for allour sakes’!(Joe Lee refers to it, Brian Lenihan Snr, Michael McDowell of more recent times.
But there was a brief phase during the ‘tiger’ years when we became ecomomically close to holding onto our people and giving them good opportunities for achieving decent standards of living but that was blown by greed and gross incompetence by those same ruling elites, their fellow travellers and by individually irresponsible citizens.
So now we have a serious decline in those living standards, economic opportunities and the provision of social services affecting mainly middle and lower strata- the ruling elites almost entirely unscathed and still in pole position.
‘Austerity’ is not just an economic term it is very much a reality for a major element of our society who are struggling to make ends meet – housing, basics, education, health protection etc.
Those who were supposed to be in control of the economy – at political and administrative, in the financial sector and at professional renter levels – do not experience ‘austerity’ to the same degree as most of the citizenry.
My definition stands up to scrutiny.

The meaning of ‘austerity’ is how it is used, on whom, and in whose interests:

‘Just to take a few examples of the “no alternative” agenda: was there really no alternative to the following cuts that afflicted most the most disadvantaged communities (this was in the context of public expenditure cuts across the board being just 7 per cent)?

Sports council –23 per cent

Family support agency –33 per cent

Probation services –36 per cent

Drugs programmes –37 per cent

Cosc (violence against women) –38 per cent

Voluntary and community organisations –42 per cent

Youth organisations –44 per cent

Community development – 44 per cent

Women’s organisations – 48 per cent

Voluntary social housing –50 per cent

Sports grants – 60 per cent

Migrants support – 66 per cent

Rapid (urban community development) – 80 per cent

Rural community development – 100 per cent

Travellers programmes – 80 per cent.

Financial System: + 80 BILLION

Corporate System: – ZERO

Re: Austerity

I mean, it was ironic today that the workshop about austerity policies in Ireland, was held in a place such as University of Limerick, . . . which as I mentioned, was just an upgraded version of the 1950’s ‘release valve’ policy.

All that University of Limerick was really about, was catching these people for a brief moment, as they were on their way ‘out the door’, and giving them an extra added bit of training for their journey.

A lot of the education centres in regional Ireland, have this culture, . . you see it in the Institute of Technology, at Limerick too, very much I notice (and I assume at other locations around the island).

As I said above, what you are witnessing in Ireland in austerity, ‘on the people’, . . . is actually austerity, on the people, who didn’t go off to England.

The people who go to University of Limerick and get their degrees and diplomas, are supposed to exit stage, and get out. The remainder who stick around, the lousy one hundred thousand or so, in cities such as Limerick and Cork, and expected to hang around and ‘bear it’.

We won’t change this either, until we extract that shower up in Kildare Street out of their cubby holes in the Dail, and plonk them into the middle of Ireland (at least a few dozen miles away from Silicon Dock,), and tell them, heh, . . now, what is the plan, for the rest of Ireland.

But at the moment, because they are installed in Dublin city, they can always run down to Silicon Dock, with a hair-do, for a photo shoot, if they ever need to advertise ‘what they are doing for the country’.

Let’s just remind ourselves of the fact that every year, 50,000 odd students sit a Leaving Cert, examination. And after five or six decades since the 1950’s in Ireland, Limerick and Cork cities together are still not any larger than a modest sized borough in the city of London (going by numbers of registered voters, like for like) ? ? ?

This should tell us something.

It is appalling.

When we talk about austerity, . . . talking about ‘the people’, . . . really just misses the whole point. The point is, the ‘people’ aren’t even there, to live through austerity or anything else. The ‘people’ have long gone off to England, and as I said, twenty years ago in my time in Limerick county, they were gone before the Leaving Cert results came out. That was in 1992, and that had been standard procedure, all through the 1980’s. I think that around my generation of the early 1990’s, was the first time that some people actually stuck around long enough to attend University of Limerick and such institutions.

Even Fingal, South Dublin and Dun Laoghaire/Rathdown, have only a hundred thousand odd registered voters between them.

There is one community, one community in the whole of Ireland, in the last half a century, which has sustained itself to some level. It has over three hundred thousand registered voters in it, and that is the local authority district of Dublin City Council.

But even that, is at best, the equivalent of one of the 32 boroughs in the greater London area. And the last time I had a ‘Guinness’ in Dublin city in 2010, with a trader who had a shop in Temple Bar since the 1940s, . . . he just said to me, . . . Dublin is a ‘ghost town’ now.

Yeah, after all the years of the Celtic Tiger, . . Dublin itself had deflated into a ghost town, after Anglo, and the bank guarantee and Silicon Dock, and the whole lot of it.

So again, even there, you were back again to 1950’s style, version ‘1.0’, policies, . . . all over again. B.

Re: Local Elections

Right, I just looked up the most recent figures again, that were quoted on the Irish Times, very helpful reports on the local elections last week.

Dun Laoghaire/Rathdown 153,500
Fingal 177,600
South Dublin 185,000

Cork City 90,600
Limerick City 118,200
Galway City 44,100

I mean, we hear this constant blaring from RTE national media, all year long about this ‘big places’ like Galway and Cork, and Limerick. And what we fail to remember, . . . is that policies of austerity can’t mean very much anyway, . . . because there are no people left at all in these places.

Teachers in universities (with all due respect), tend to miss out on this point too, because they are meeting a constant stream of young Leaving Cert graduates coming through their programs.

But in general, we have exported our population, for all intents and purposes.

I will admit though, that the numbers for DunLaoghaire/Rathdown, Fingal and South Dublin were better than I could recall, climbing towards two hundred thousand gradually. But that makes it the story for Limerick and Cork, look all the most dismal, the fact that none of them even have a quarter of a million inhabitants yet. After how many years since independence in Ireland ? ? ?

Don’t get me even started about Galway. You’d think to listen to the national media, and the problems of trying to run a city the size of Galway, that is was some kind of major metropolis or something. We’d really want to get some sense of perspective, of where we are at, here in Ireland at this stage.

As the Engineering professional who commented at the workshop at University of Limerick today, . . . who said his expertise was in MEASUREMENT, you have to decide where your origin point should be, your ‘zero comma zero’.

And that’s exactly what we don’t do in Ireland, . . . in case, we would be forced to measure something, . . in any way that was ever meaningful. BOH.

Re: Empty Houses

And as the Engineer at today’s workshop also pointed out, . . . we have 300,000 empty houses in Ireland today.

And yet, between Limerick, Cork and Galway, . . together, . . we don’t even have 300,000 registered voters.

And yet, you look at the front page of our newspaper, as the Engineer said, and the head line is, the policy of national government is to build more houses (even though they are needed in Dublin city), . . .

You begin to wonder really, is there one decent political or policy making brain, . . between all of the 150 or so parliamentarians that we do employ to sit up in Kildare Street.

Over and out. BOH.

@ DO’D

Don’t forget we found €30m to give to Cork GAA for a redeveloped stadium that may be used a few times a year. This €30m could have been given towards all-weather, municipal facilities in towns and cities that would benefit all sports organisations.

‘Is there one decent political or policy making brain…..’

Based on performance of several administrations over the last 25/30 years – the answer is a very definite ‘no’….

Perhaps TK Whittaker was a policy wonk freak and maybe he was lucky in having Lemass buying into his ideas and plans but nothing of any sort of calibre in the mandarin economic sphere has emerged since his time.

We have been grievously ill-served by the mandarin class in this country for the last 25/30 years – and probably since the foundation of the State…..

Re: Policy Wonks

What I do notice listening to debates on media, since the local elections where Sinn Fein party policies have been examined in debate, what I do notice, is that Sinn Fein is a community in which policy wonks are tolerated.

That hasn’t happened for a very long time in Ireland, and it is probably not a bad thing. Fianna Fail obviously were able to do it towards the later half of the 1950’s. The policy that they invented back then, was one that could work for Ireland, based on how the globe was in the 1950’s, . . . and how Ireland’s relationship with the rest of the world was, back in those days.

What I notice from the Sinn Fein policy proposals that I have listened to on the media debates, there is one theme which runs through everything. It is the theme, based on reality and fact actually. What you do, is you accept the fact, that hundreds of thousands and millions of able bodied, young, capable people have been exported out of Ireland, . . . under the policies pursued by all parties for over a half a century.

What you do now, is you cobble together what bit of a population is still left around in Ireland (and un-surprisingly, it is an aging population, the ‘hump’ of it being the 1960’s generation now reaching retirement who didn’t emigrate), . . . and you create ‘one program’ for that bit of population that is left on the island of Ireland.

It makes sense.

We can’t afford three different health systems for such a small aging population that is left. We can’t afford three different pension systems. The only real ‘economy of scale’ (in the absence of scale, . . because we exported so many generations in the last sixty or seventy years), that we can now create, is to reduce all programs to a ‘single program’, across the board.

In other words, you take what taxpayers and working people are still left in Ireland, and you concentrate the forces, to try and achieve the best impact, with what you have left. It’s like a little army, that has been torn to shreds, . . . and is all backed into a corner, and is fronting up for its last stand, . . . and we say, we’ll try and ‘go down fighting’ at least.

One can call it a left wing approach, or whatever, socialist, or whatever.

Socialism is about ‘the people’.

But having socialism in Ireland, is a bit daft, because it’s like having socialism WITHOUT the people, . . . because they’ll all been exported.

What Sinn Fein policy is actually about, is accepting the fact, there is no one left in Ireland to pay any taxes, or do any work, or provide any form of social protections whatsoever, . . . but we group whatever resources that are still left, and we fight from there.

And to be honest, and we all due respect to the fine, world-class academics, who debated the policies of austerity ‘on the people’, in Ireland today, . . . we are not Russia, we not Spain or Italy. We are not France. We are not Germany.

We don’t have a ‘people’.

We have an absence of a ‘people’.

And to pretend to debate and talk about what austerity we should or should not impose on the skeleton crew that gets left behind, or do not get to work in Silicon Dock, is really very academic.

I mean, the children that are being born in Ireland today. What does anyone honestly believe we will be telling those young people in ten, twenty years, when they are high school graduates?

You could almost write the script today.

And there is no great motivation on the part of anyone, to change or to alter that script.

Young people are told to get out of the country, leave us here, we’ll just get older, and argue more over austerity. We’ve been doing that for generations really. But it has nothing to do with austerity. In order to have austerity, you first have to have a society, a population, a critical mass of some kind. In that respect, in Ireland, through means of national policies and national governments, we don’t qualify. BOH.

Re: Multi-Nationals

All you have in Ireland, is a very small number of very frightened people, who cling desperately to a very small number of multi-national corporation jobs, . . . and cling to the taxation policy, that they hope will enable that very small number of multi-national corporations to remain around long enough.

The system and framework of elections, local and national politics, is built around that. That’s not a society under any meaningful definition of the concept. That’s just a temporary and unstable arrangement. BOH.


Simply ain’t cricket!

That field got 60% of the ‘social housing’ budget!

@ grumpy

Shay’s first comment is very good in larger terms.

My understanding of austerity is that it is a government raising taxes and/or cutting expenditure during a downturn. I think, but would welcome evidence, that that is what most people think it is.

What the last few years has shown is that austerity in this sense has had a much more negative impact than some influential economists (expansionary austerity) or mainstream bodies (IMF, EU Commission, ECB, DOF, IFAC, etc) have expected. Why did they think this? I’m not sure, but some combination of rejecting Keynes, not grasping a balance sheet recession, bad maths, rubbish models that don’t contain finance, political self-interest, er, delusional thinking, hand-waving, saying ‘how could anyone know’ etc.

A different way of looking at it is that mass unemployment is now seen as an acceptable variable in order to keep inflation, competition and/or government debt within limited figures. I would rather employment was seen as the fixed basic aim to achieve and the other figures had to move around it.

This is just a comment as ever and I look forward to reading the papers from the conference.

With Respect to the Question of….Social Consequences of Austerity.

I hope there is a much greater awareness that the only person who you can trust is yourself.

When the austerity comes… relying on the state, or politicians, some job bridge scheme, the ECB or Europe is a waste of time.

I sincerely hope that our younger generation have become wiser, more astute, more emboldened, more determined that a secure future lies in a good education, gaining in experience (possibly abroad), having a second or third language.

That way when the Irish economy is thrown off a cliff in 2027 people will have the ability to just up sticks and leave this country for a better life elsewhere.

@Gavin Kostick

My understanding of austerity is that it is a government raising taxes and/or cutting expenditure during a downturn. I think, but would welcome evidence, that that is what most people think it is.

Short, sweet and useful. I buy that, though I would have thought you can have austerity without tax raises but not without cutting spending.

What I was trying to get at above was that austerity is not a response to anything and not a policy with an economic goal – its purely opportunistic. That is one of the reasons its been so hard to argue with the austerians, one side is talking policy cause and effect in the real world while the other is talking about changing the world. Very much like the old Neocon Koan.

“We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality – judiciously, as you will – we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to study what we do.”

Remember also that the austerians have displayed a certain slipperiness making it hard to pin them down:

* Austerity is just the name for the policies that sensible people agree an economic crash requires. (the “bullsh*t” gambit)
* Actually there is no such thing as austerity – it is a meaningless term of abuse. (Rehn at one point)
* There is such a thing as austerity but it is actually an expansionary policy. Everybody wins!
* Austerity is obviously contractionary (who could have thought otherwise?) but a sound recovery will be enabled by the necessary suffering at some undefined point in the future. Then we will live in an idyllic “Stability Kultur” and you’ll all thank us.
* There is such a thing as austerity but this isn’t it and that is why things are not improving (the “hysterity” chorus).
* There was such a thing as austerity but it is no longer necessary, having achieved all its many goals, like ballooning national debt, a shrunken state, high emigration and reduced security of employment (the farm collectivization defence).

The confusion about austerity is a necessary part of implementing it, at every point the attempt is to present the policy as an unavoidable response to current circumstances (what ever they were). Trying to compare it with other policies was pointless – there were no other possible policies. TINA redux.

@Gavin K

“mass unemployment is now seen as an acceptable variable in order to keep inflation, competition and/or government debt within limited figures.”

Regarding the “now”, when do you think that commenced?

@Brian O’Hanlon

That was quite a contribution. To what I am not clear, except that none of it was complimentary of Limerick.
You might have acknowledged, as a Limerick person, the success of the organizers in bringing leading Irish and international economists together to attempt to debate the results of a policy that is causing untold hardship across Europe right now. A policy that will probably have devastating long term political, social and economic consequences.

‘The neo-liberal left of Europe and North America offer no solutions. They cannot offer solutions, it is not possible under neo-liberalism to fix the problems neo-liberalism has created: they are a result of neo-liberalism’s genuine beliefs about how the world economy should be run.

You can not, under the neo-liberal model of globalization, tax the rich effectively: they can go somewhere else. You cannot hold wages up, because jurisdictions can always be played against each other. You cannot fix the environment and stop the mass wiping out of species and the probable death of a billion humans, because jurisdictions can be played against each other. That countries no longer produce the majority goods they need themselves, nor in many cases even the food, means jurisdictions cannot unilterally do the right thing, even if they wanted to (which they don’t.)

Because the oligarchs also control the means of ideological dissemination, you also can’t effectively communicate either the problems or good solutions. Because the oligarchs control the means of political production (ie. the process of producing and nominating political candidates), you can’t get into power the people who would actually want to change the neo-liberal political order (and if by some miracle you could, expect them to be treated as Argentina or Venezuela have been treated or destroyed as Howard Dean was.)

Neo-liberalism is an effective ideology and set of policy prescriptions: not because it produces good outcomes for the majority of people (that’s not its purpose), but because it creates a constituency (oligarchs and their supporters/retainers) who are able to maintain it in power.

All ideologies eventually come to an end, however. The oligarchs hate real left-wingism far more than they do fascism. They have crushed the left. Because no new coherent ideology can arise due to oligarchical control over the mechanisms of dissemination, all that remain are old ideologies.

Given no real and viable left-wing parties to vote for; given the failure of what they are told are left-wing policies (as with Obama being called a left-winger when his economic policy has been to give trillions to oligarchs); people will vote for the only other option: the hard right—the neo-fascists.’

I tend to agree with Shay here – opportunistic. And no shortage of ‘useful idiots’ who spin away and spin and spin …. for ‘petty’ power.

Re: Thanks Joseph

@ Joseph,

That is, if you mean the debate about the policy of austerity on Europe.

The part of the discussion I tuned into yesterday on the Livestream, didn’t talk about the policies of austerity on Europe. What they talked about were the policies of austerity on Ireland.

But I can accept, that the contributors would have started out with the broader objective, . . . of looking at Europe as a whole, . . and austerity in that broader context.

Discussing the subject of austerity, in Ireland and it’s impact, is fundamentally different from discussing the same in the context of other European countries (which have achieved a greater critical mass of population, society and urban settlement over decades).

The problem is not, that national government has imposed a policy of austerity on the rest of the Ireland. The problem is, is that national government, doesn’t have a policy for the rest of Ireland.

The biggest tragedy for Ireland in 2014, is not the imposition of austerity on the few inhabitants that we have left on the island. The biggest tragedy is the absence of so many individuals who are not here, to experience any policy, good, bad or indifferent.

We don’t have a big stable population like in the United Kingdom, or in France, or Germany, or Spain, or Italy. So when we discuss austerity in Ireland, we should not pretend that we do live in a country like France, Germany or Spain.

We could go to full socialism in Ireland, . . . if we wanted to. We could grant a controlling majority in parliament to the socialist workers party. We could adopt the most pro-society, anti-austerity policies that one could imagine.

But what would that translate into in an Irish context?

If they did go full socialist in France, yes, that would be a minor earthquake. If we did the same in Ireland, it would generate far less interest that it would even in Cuba.

The children that are been born in Ireland today, will still be expected to leave the country in twenty years time. That is our orthodoxy, and that is what we have grown to accept in Ireland, over generations.

The arguments that are interesting to have in the United Kingdom, or in France, where they need to manage large populations, are just not that interesting to have, in Ireland.

The objective in Ireland has never been to accommodate people. It has always been to get rid of people, in the most efficient manner possible. This is what our universities are set up and mandated to achieve. And they are fairly good at it. They’ve had years of practice now.

Socialism, is about people, and you can’t have it, without people.

What difference would the end of austerity make in Ireland, . . . if there was no one around to enjoy it?

Cities such as Galway, Cork and Limerick should become destination places for influxes of inhabitants from Scandinavia, eastern Europe, from the Mediterranean and the Balkans. That is the only way that those cities will ever re-grow again. We ought to be aiming our efforts in terms of long term policy making there, if anywhere.

When you have a critical mass of people, then you try to give them socialism, anti-austerity, democracy, freedom of religious and whatever else they need.

University of Limerick, is a world class facility, with world class people.

It happens to reside on the edge of a very small dying town. Even though Limerick is probably the most healthy of the three largest regional towns in Ireland. But that is no standard to judge by. Limerick needs to grow. It is time for it to grow. And we should not accept anything less than that, in cities such as Limerick.

This policy we had of launching Irish men and women, out into the globe, from launch pads, was fine for the past. The world has changed. Ireland’s relationship with that world has changed. In Ireland, we need to change. Our cities need to change, and our politics.

The best of universities in Ireland, including those at Limerick have been far too silent in national debate in Ireland, for far too long. It is time that universities from Cork, Limerick and Galway joined in, in the national debate. You don’t hear a squeek out of them, coming from our Senate in Kildare Street. It is almost as if, our regional universities don’t care about the national conversation.

Places such as University of Limerick are successful at attracting talent from abroad, . . . at an incubator scale. We need to put that model into production, supported by policies from the national government in Ireland. There is no program for that, and that is not happening.

Places like Cork, Limerick and Galway are physical evidence, of national policy making that emptied the island over generations. I do not hear voices from Cork, Limerick or Galway in the recent debate about housing policy for instance.

Not a solitary whimper.

It tells you that our regional towns and cities are not open for business. These places don’t want people. They want to get rid of them. People are viewed as a ‘problem’. You get told that even in third level in those towns. It is the opposite to what we ought to be doing now.

Irish regional cities have huge capacity, that is being ignored by national strategy and policy.

You could double the size of our regional cities. Where is that plan? These places could attract talent and enterprise, from all over Ireland and all over Europe, . . . if they were open for business.

Our regional cities, unfortunately, are viewed as problems to be contained.

The Dail, the Irish parliament needs to be separated from Dublin city. National government should not be obsessed with getting houses built in Dublin. Dublin city should have its autonomy, its mayor, its administration capable of tackling issues that it will face as a European city.

It doesn’t need, or shouldn’t need hand holding from national government. Housing construction in Dublin city, shouldn’t be the cornerstone of policy at a national government level. Dail Eireann, should be re-located into the centre of the ‘island’.

The problem is not, that national government has imposed a policy of austerity on the rest of the Ireland. The problem is, is that national government, doesn’t have a policy for the rest of Ireland. BOH.

@ grumpy

“Regarding the “now”, when do you think that commenced?”

Good question. Certainly in practice you can see it in the unemployment figures in various different regimes which have various different priorities, eg these figures from Eurostat here where you can see EZ unemployment figures compared to the euro area as a whole. Also compare to UK, Japan, USA, Iceland etc. That is, whether it is overtly stated as a policy or not you can see a very large divergence between the periphery of the eurozone and the eurozone in general on one hand with say, Iceland or Japan on the other.

In ‘Age of Empire’ (I think) Hobsbawm makes the fascinating point that one consequence of mass participatory democracy, for men at least, at the end of the nineteenth century was that politicians started to lie. Previous to that they could say more directly what they thought about the working classes as there weren’t any votes in it. So you wouldn’t expect modern politicians or the ruling classes more generally (except maybe in the US) to actually say out loud, ‘right, 10% unemployment for a bit is what we need to drive down wages and tame inflation’. This fits with the famous ‘we all know what to do but we don’t know how to get re-elected’ mindset.

You do see it a bit more in the technical papers, for example in one of the MoUs with Portugal it went pretty far along the line of saying well unemployment is higher than expected but that should have the bonus feature of driving down wage demands.

More generally, looked at squarely, ‘internal devaluation’ is predicated on the notion that as interest rates, exchange rates, etc can’t do the shifting then, though you can if you like entertain yourself with fantasies of suddenly improved production, to devalue means taking on those frustratingly sticky wages which means mass unemployment. Prof., Sinn, in spite of his fearsome reputation, in his presentation in Ireland thought that the practical effect of ‘internal devaluation’, which is the only way in the EZ, is so appalling that it would be better if the EZ was a loose club of members who could come in and out at different rates.

I put this also to Colm McCarthy once, who wasn’t prepared to go as far as to say it was deliberate policy but did say that he thought the Margaret Thatcher government had done it deliberately: presumably the first one to tame inflation (but sadly not asset inflation) and set about breaking the unions.

So as a modern phenomena in the West, I’d say early 80s under Reagan and Thatcher, with perhaps a run in Chile in the 70s as a first go.

More generally again as a macro-economic idea I’m not sure how far it would go back. But once you have a formula, a model, that interrelates some basic concepts: say GDP, inflation, employment and you say you want to put your finger on one to stop it moving as a priority then by implication you are prepared to see the others move to achieve this. Further back, maybe the ‘liquidate everything’ (Mellon) approach in the USA at the start of the great depression and probably right back into the 19th century with the response from the Luddites and the analysis of Marx.

A common definition of austerity might be difficult to agree, but it would be a pity if both an economy and the majority of people in it were to continue to suffer for want of a definition of the disease that was being inflicted on them.

“Is it any more complicated that?”

Is it any more complicated than a specious analogy between a government and a household would suggest? Why, yes, I’d say it is.


“Austerity, it’s a word that people like to use. What we’re really saying is that you cannot spend more money than you’re earning.

What??? …. my God …. that is truly shocking!!

Ireland has other problems…like spending money on ideologies which will actually increase the burden of future taxpayers, make things worse… not better.

Even if Ireland ran a balanced budget now…. with a bit left over to pay down the debt… we are still spending money unwisely.

@Gavin K

Was interested in why you used the word “now”, in case you thought it was recent. I vividly recall conversations with counterparts, back in ’88. Lawson had cut taxes, house prices were booming, strike days were spiking and we reckoned RPI had established a firm if gradual upward trend. I opined that the UK government were going to (contentedly have to) get unemployment up again in response. ‘Nah, they wouldn’t do that!’ or something along those lines was typical of the twentysomething young conservative – no push-back at all though from the more experienced crowd.

@ Ernie

Would you care to elaborate? If we spend more in terms of government outlays than we raise in taxes and neither our official creditors nor the markets will lend us any more money, what do we do?

It is not, in fact, that complicated! There is, however, a pervasive flight from reality which is reaching something of a crescendo in the context of the Labour Party leadership campaign. To borrow a phrase from the legal world “hard cases make bad law”. There is no appreciation of this in the constant media coverage. Maybe this conference will help shift the focus!

@Gavin K

Incidentally Colm’s point about the ’79 – ’83 recession is spot on and very few reasonably people would attempt to argue it was not. It was not said out loud, in public places or near a microphone though, it was just ‘understood’.

@ sporthog

Of course! That is the burden of the argument that I am making. However, use of “austerity” as a catch-all phrase for the “suffering” – undifferentiated – of the Irish people is an exercise in avoiding the necessary comprehensive detailed examination of the budgetary facts.

This is where the focus of the academic community should be. It certainly will not happen in the body actually responsible – the Dáil – this side of the next budget; assuming the present government can agree one.

@Ernie Ball

Is it any more complicated than a specious analogy between a government and a household would suggest? Why, yes, I’d say it is.

The Moran piece is pretty chilling – I do not think he is an idiot which means he is another shameless neoliberal propagandist. I know it is all self selecting and that only people who hold closely to the establishment position end up in the establishment but it still makes me feel sick. At least he is going.

One interesting thing, the justifications for austerity are definitely changing to be much more normative than positive. At one point the various economic suicide pacts were sold as provably beneficial economic policies which it was necessary to put into law – now they are politically sound laws which it is necessary to put into practice – the larger macro situation has simply been removed from the picture (because it does not fit in) and its 100% swabian hausfrau. Moran could pull off a rubber mask and be Wolfgang Schauble.

It all proves, as with Gavin Kostick’s note on the possibility of Gilmore getting a European Commission 250k PA tax free reward for towing the European Commission line, that you can never be cynical enough about the current EU establishment, even allowing that you already know that.

Off topic, if I had to pick Labour’s (and Ireland’s) biggest political mistake it would still be the Fiscal Compact, it is the neoliberal cuckoo in the policy nest and now, long after everyone in the reality based community agrees the European Union approach has been an abject failure we still have it written into law.


Re your Examiner article….

Indeed it reminds me of…. “chickens ….. roost” for the council members.

Re your METS 2020 finance article….

The section on progressive taxation for a single person…. Ireland right at the top….now that is austerity if I ever saw it.

And a commitment to remain the most progressive as well!!!

But I still don’t believe the “establishment” get it….. the socialist ideologies which have been implemented over the last 20 years have placed a massive burden on taxpayers, crime is just one example.

A taxpayer.. and has the unfortunate experience to become a victim of crime is actually funding the security & legal industry, not the criminal. The justice system in Ireland places an enormous burden on taxpayers… even when taxpayers are the victims of such activity.

It’s bizarre, unjust and in the long term unsustainable.

@ Sporthog

Where to even begin! Still, desperate situations require desperate remedies and we are steadily getting them.

Incidentally, you will have noted the reference to linking the previous salary of the lord mayor to that of a TD. The latter’s salary is, however, linked to that of a Principal Officer in the civil service (since 2002 following the recommendations of the Buckley Report). When you have those nominally in charge of control of the public purse on the same side of the door to the national treasury as those spending what it contains, it is hardly surprising that it was raided and continues to be by a wide range of vested interests (departing redundant councillors included).


Would you care to elaborate? If we spend more in terms of government outlays than we raise in taxes and neither our official creditors nor the markets will lend us any more money, what do we do?

Sweet suffering Reason. Have I gone back in time to 2009?

Firstly, why do we want the government to spend more than it gets in revenues? It is the future economy, stupid.

A state can spend more then it receives in revenues and increase its debt because the medium term budget position is based on the size of the economy (which government spending disproportionate contributes to in a recession) and not inversely with the sum of the governments budgets (which is “not even wrong”). A crash diet does not make you fit. In many situations you can continuously cut your budget and still end up with a growing deficit and a badly damaged economy that never properly recovers (like now in the EU, as a totally random example). This is simple stuff backed up by historical evidence and the exceptions there are to it do not apply in the current situation (eg: Ireland in the late eighties)

Next why can we not do this now? It is the current construction of EMU, stupid.

The reasons why we can not borrow more are not solely or even principally economic ones. They do not relate to the health or potential of the economy as much as they relate to investor’s worrying about the ECB fulfilling the normal role of a central bank. The huge financial sector debts under which we labour under (or “cant labour because of” in the case of the under 25s) are again unmanageable because of EMU – a large proportion of them should have been written off and printed or inflated away. We both need to borrow more and can not borrow more because of how EMU does not work for us.

So your question really is “How can we engage in healthy counter cyclical government spending in EMU as it currently stands?”. There the answer is the one you are looking for – it is not possible.

However if the question was “How do you propose to stage an economic recovery under the current version of EMU?” the answer would be the same one – it is not possible.

There is no plan you could follow and you are essentially just relying on other people (other economies outside the EU in fact) to recover and pull you with them. It is a prayer to the markets, bloody tooth after bloody tooth left to attract the confidence fairy, not a well thought out policy. Staying the course, sticking to the various packs, observing the European Semester, meeting the “commitments” we were forced to make and cutting our way to success is a fantasy.

So the the question to the answer you asked (and not the one you think you asked) is “We propose to do this by engaging in a political struggle to make EMU work properly or somehow withdraw from or collapse EMU so as normal counter cyclical spending practices are possible”.

Every time you ask this question I will reply with a new and longer version of this text. I might even throw in some references. I do not enjoy it. but I’ll keep doing it.

@ Shay,

The UK is not part of the Euro…. yet they had a massive bail out of one of their own banks… RBS… apparently the biggest bail out of a bank in history… 46 bln euro.

It is possible if Ireland had never been part of the euro project… we still would have ended up bailing out our banks anyway.

If I understand your argument correctly… you believe spending now… will plant the seeds of growth… and will produce financial rewards for the economy in 3 to 5 years time etc. Am I correct?

Writing in the SBP today under the headline “Why we don’t have the money to reverse austerity” Chris Taylor opens with the following;

“Irish politicians have spent the week talking about easing up on austerity – about giving something back to hard-pressed families. Tomorrow, they will get a reality check from Brussels. The European Commission will issue new recommendations on the Irish economy, among which will certainly be that we must stick with the budgetary programme”.

Kevin O’Rourke was looking for real choices in the political debate on another thread. It seems that he may be about to get them. The almost unavoidable scenario in the coming months is (i) a budget is agreed within the set EU parameters or (ii) it isn’t and Labour quit the government. In which case, either there is an election or Fine Gael continue with presenting a budget as a minority government, with the support of Fianna Fáil.

The reality check which has been avoided by most politicians (with a few honourable exceptions among serving ministers) and, it seems, a very sizable sector of the electorate, will finally have arrived.

Of course, the Commission may have seen the light!

We have the money. We’ve chosen not to use it, preferring to afflict the afflicted.

‘Writing in the SBP today under the headline “Why we don’t have the money to reverse austerity”’

Headline writers can be a curse of course but assuming ‘we’ is the Irish people, I suppose a reasonable answer is because there was a property bubble driven by low interest rates plus national and international decisions plus capital inflows then the FF/Green government guaranteed a certain amount of bank debt and then some combination of the Troika (ECB, EU & IMF) and the USA insisted the Irish people pay for the failure of the Irish, USA and European banking system in full over and above that guarantee. Which is to say Ireland doesn’t have the money due to an international financial collapse and self-interested decisions by the political/ruling class nationally and internationally in the run up to, during and post the financial crisis. Had the Irish people not been forced to pay private bank debts (that is the money moved to public accounts) then there would have been enough spare for a stimulus in spite of falling revenues.

A couple of questions for you if you have the time, when you say:

“If we spend more in terms of government outlays than we raise in taxes and neither our official creditors nor the markets will lend us any more money, what do we do?” over what time frame are you thinking?

and, in the event of Eamon Gilmore becoming an EU Commissioner would this affect your view of the Commission?

@ GK

The French have a saying that there is little point in looking for midday at two in the afternoon. That is the problem with trying to wind the clock back with regard to the euro and Celtic Tiger years.

As to the other points that you make, I am guided by the facts and figures advanced by those in charge of them, for better or for worse. We will see what is in the Commission document tomorrow.

As to the latest rumour of Gilmore being nominated as Ireland’s commissioner, I cannot see it happening given that the post is in the gift of the Taoiseach. But, who knows!

My view of the Commission is anchored in its legal position under the treaties, not personalities. What holds the EU together is the respect of the participating democracies for the rule of law as epitomised by the treaties that they have signed up to, and the political forces that caused them to sign up to them in the first place. Full stop!

On the other hand, the stronger the candidate a country proposes for the post of commissioner, the better the chance of getting a senior and influential position. (There have been Irish examples in the past). Schaeuble has recently resurrected an old idea of “senior” and “junior” commissioners. The problem for him is that the Commission, with the wisdom of the founders of the EU, is a “college” and can only act as such, deciding by simple majority.

One could mention the near farcical discussion among Europe’s “leaders” now taking place with regard to the appointment of the next Commission president. Cameron, with his usual skill, seems to have placed the future of the UK in the EU in the weighing scales as part of the negotiations!

Marine Le Pen has a contribution in Der Spiegel this week which should cause quite a few Frenchmen, and quite a few Germans, to sit up and take notice.

That FT link re Spain is worth a look and a full discussion. Spain ‘committed’ to a 3% budget deficit in 2016 is going to spend its way to that deficit with a 5.6% deficit in 2015 rising to 6.1% in 2015. In addition is is going to ‘boost’ the economy by, of all measures, corporate tax cuts i.e cutting tax on the wealthy a la George W Bush.

It has the feel of a gamble about it, while conferring benefits on wealthy friends and allies of course.
The subtext too in Spain’s approach is that expenditure cuts are over and no longer politically feasible, and that is also the case in Ireland, a scenario that will come sharply into play within the next few weeks, as Labour try to elect a new figurehead, leader hardly being an appropriate word for the role right now.
The fact that some groups, many indirectly on the public purse got away with little or no cuts is as shameful an episode in the current crisis as any other. But, either way, any further austerity will have to be through tax increases of one kind or another. The tribunal lawyers and the legal establishment being close to top of the list of the untouchables, as well as continuation of jobs for the boys and jobs for the girls, and jobs for the consultants who employed the sons and daughters of the boys and girls in power. All this while an indentured servant job-bridge program was rolled out for the unconnected and the masses.

[So much for Mr Noonan’s tax bands proposal. Personally I feel this government will not get as far as this years budget, and could collapse on the labour leadership change. The Paddy Power bookmakers odds on a new government would seem to indicate such a scenario ]

@ JR

No joy for Ireland, however!

As to the other points that you make, what strikes me is the implicit confirmation that many, if not most, matters in relation to austerity or, more accurately, fiscal consolidation, are firmly within the remit of member countries. This is not a fault but a political necessity. The democratic process with regard to such matters can only lie with the member countries. Any other approach would be asking for trouble. Barroso also made the essential point in his press conference that these are Commission recommendations, not a ukase. It is up to member countries – all 28 – to decide whether to endorse them.

Yves Mersch of the ECB made a speech obviously deliberately timed and designed to set the context as far as the operation of the euro is concerned.

@ JR

Not least in relation to what Rehn had to say about tax.

“Finally, before turning to László and Algirdas, let me say one thing based on my recent experience over the last months on a campaign trail, which is very relevant to what Algirdas will say at the end of this press conference. If there is any consistent and cross-cutting message among our citizens across Europe, it is that we must further strengthen and intensify the fight against tax evasion and tax fraud and tackle the practices of aggressive tax planning and tax avoidance seriously. We have done a lot in this regard, both by the European Union and by the Commission, as well as in the context of the G20, for instance internationally, but we need to further intensify working this very important field. It is not only a matter of preventing the loss of tax revenues, to safeguard our public finances, which is obvious, but it is at least as much a matter of social fairness and civic ethics which should underpin our European economic and social moral also in the future.”

It’s like the EU is talking to itself in here. Just like in the real world.

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