Sunday, November 22, 2009

Peter & Paul - Till Debt do they part

The great Irish playwright George Bernard Shaw said "a government that robs Peter to pay Paul can always depend on the support of Paul". So how is Peter doing?

Well Peter who we might regard as the ordinary citizen presently getting knocked over because he wasn't smart enough to win money on the horses like Bertie (he was quare lucky that Bertie) is not doing so great.

In the southern state Peter is relying more and more on the state to make ends meet. The CSO's survey on Income and Living conditions 2008 revealed that social welfare and benefits accounted for more than 22% of household income

But for the 10% of households in the lowest income bracket these state payments accounted for 88% of the gross household income. Now every week for months this govt. has been jumping from one position to another when it comes to such payments. They have to be cut drastically or cut a small bit. Smash these dole bludgers or its just necessary cuts etc.

All they have succeeded in doing is terrifying ordinary people who rely on state transfers to make ends meet. Now scaring the bejaysus out of people is hardly doing anything to boost consumer confidence and today's Irish Times report, anecdotal though it be, is further evidence that this govt. is only ensuring economic activity weakens further and further. Japan, move over! south Ireland is thinking about joining you in a lost decade.

But besides the deflationary impact this will have there is a more immediate impact. As mentioned households rely on the govt. for 22% of household income. Add in the fact that southern Irish household debt as a percentage of disposable income increased from 48 per cent in 1995 to approximately 176 per cent in 2009 giving us the dubious honour of being fourth among developed countries in terms of debt ratio.

In other words we are over our heads in debt and the clowns at the top who have NAMA for their developer buddies think Peter our indebted citizen can go hang. Welfare is going to be reduced by god and if that tips him and thousands others over the edge into bankruptcy then its a price worth paying. Who cares that 20% of households were in arrears on payments such as bank accounts, mortgages, rent, credit cards and utility bills. Almost eight per cent of households had arrears of two or more types. Who cares? Well certainly not Fianna Fail.

So what happens when you go bankrupt in south Ireland. Well, as described in an excellent article in the Irish Times, you dont actually go bankrupt. You see when our flag went up over Dublin we didnt seem to ever get around to changing the Victorian mindset. In 2007 a grand total of 4 people went bankrupt in south Ireland. 4! Considering the collapse of the global finances in 2008 this rocketed to 8 in 2008. Doesn't sound right does it?

But remember I mentioned Victorian mindset. Well in the South you have the Dickensian outcome that you get 12 years to discharge your debt; as opposed to 12 months in Britain and 5 years in many other european countries. As the Times noted 12 years is longer than manslaughter. And now that we are speaking about Prison maybe we should think about a system that jailed 276 people in relation to the non-payment of civil debt last year. While the High Court abolished the imprisonment of debtors due to an inability to pay their debt earlier this year its still on the books. Still jailing someone at the cost of 2k a week must make sense on some level although not if they owe money on the level of Seanie Fitz.

And typical of south Ireland when the state fails the people must fend for themselves. The money and Advice budgeting services, a voluntary group, saw its number of clients jump from 14,551 in 2006 to 23,000 this year.

As our economic recovery document says:

There are currently 422,500 people on the live register. This number is growing and there is no government strategy to deal with it. The government claims that saving the banks will fix the economy. Proving them wrong will be cold comfort to the many people who have lost their jobs, who face this Christmas in debt, in poverty and with the prospect of the very small payments made to them by the state being cut.

We are facing into the worst financial crisis since the last one caused by Fianna Fail and we have to rely on a voluntary group to support ordinary people from the deprivations of a Victorian era bankruptcy model thats going to be pushed to the limit by the deflationary policies of a govt. thats intent on reducing the income of one of the most indebted people in the industrial world.

A Bankrupt state morally if not yet financially. I am no radical but the only thing that springs to mind in response to this situation is does anyone have a sledgehammer. This state needs to go.


  1. Good article Giorra. The fact is Fine Gael offer nothing different either and labour need to decide if they are left or simply there to help Fine Gael into power.

    Sinn Féin need to offer a real left alternative and show that on both sides of the border. If the party does offer real leadership in the six counties then I believe the people down here will take note and our support will grow.


  2. Of all the major parties, SF alone has begun to carve out a solid leftist position. Of course getting the message out into the public is a big problem but the introduction of Joanne Spain as spokeswoman for economic matters should help in this regard. Her interview was particularly interesting. She was a wee bit slow in changing gears, so to speak, but she showed a fundamental grasp of her brief. What's more, she seemed genuinely engaged and vitalised by the entire process. I can see her going from strength to strength.

    It seems that the party has cottoned onto the need for a strong letist economic agenda fronted by a strong spokes person. We now need, imo, a small and dedicated team of marketing guerillas to get the grass roots messages into the public domain. I came across a Pearse Doherty flyer last month on education lying on a cafe table. It was very well done. Maybe a bit more of these "modern" pamphlets could make an impact on economic issues.

    Taft's critique of the economic program is also welcomed. While he brings too much classical economic analysis, imho, into his criticism, the very fact that he chose to critique the policies underscores the real content and viability of the policies.

    Just one observation (come on now, we leftists have to nit pick about something :-]). There was a quote about Japan in the article. Maybe a wee post on Japanese economics and culture wouldn't go amiss. They have the best GINI score (for what that's worth) in the world, which is a measure of fairness or equality in society. They also have a healthy dose of leftist perspective in their cultural. Their main critics have always been the Americans who measure achievement in quarters. Whereas I've heard those knowledgeable about Japanese society say that Japan will always take a long term view. If it takes 25 or 50 years to create a new and viable political economy, they will take as long as it needs. Their prorities are as much cultural as they are economic. Let's face it, the Japanese fell into the classic Capitalist trap of over production. Unlike the recent US debacle, the Japanese simply produced so much stuff, which they sold to the world but mainly the US, that they ended up with too much accumulated capital and too few assets in which they could invest.

    Anyhow, the recent developments within the party are encouraging. But this is literally the never ending road and we need to garner the grass roots support that can make the policies the basis for real and lasting change.

    slán agus ádh mór ort