Why Irish eyes aren’t smiling

Ireland and Canada offer contrasting warnings from the front line of the budget deficit wars.

As he softened up the public for his brutal austerity package, George Osborne contrasted the coalition, steering Britain out of the "financial danger zone", with the wretched condition of our closest neighbour, Ireland. His put-down would probably have resonated with his Anglo-Irish aristocratic ancestors. Heir to the baronetcy of Ballintaylor in Tipperary, the man in charge of the British Exchequer doubtless laments the demise of the old Ascendancy that ruled John Bull's other island for so long.

Yet the reality is that our rookie Chancellor, along with his cheerleaders in the right-wing press, has been swallowing wholesale the dangerous blarney about the benefits of draconian budget cuts that has floated over the Irish Sea from the department of finance in Dublin.

Osborne's obsession with "rebalancing" the books in just five years is scarily similar to that of the Irish finance minister, Brian Lenihan, who is hell-bent on bringing the republic's borrowing level back down from a projected high of 32 per cent of GDP to the EU limit of 3 per cent of GDP by 2014, whatever the consequences.

The proud scion of a post-independence political dynasty, Lenihan has waved aside all objections, inside and outside the Dáil, slamming through a series of slash-and-burn budgets. His measures have merely compounded the bleakest financial crisis since the foundation of the Free State. Things will become even grimmer for Ireland when Britain, still its biggest trading partner, starts to feel the full effects of Osborne's austerity. The Irish might be burning effigies of Lenihan, were he not fighting a life-threatening form of pancreatic cancer. The plain people of Ireland remain impressively compassionate, arguably much more so than their present masters.

The more Lenihan slashes - he is planning another double whammy of spending cuts and tax rises in December (amounting to at least €4.5bn, on top of the €3bn he hacked out last year) - the more he lengthens the nation's dole queues. There are 455,000 Irish citizens (almost 14 per cent of the population) registered as unemployed or underemployed, and the jobless total is heading for the half-million mark, further reducing income tax revenues and VAT receipts. As the republic's beleaguered retail bosses could tell Osborne, consumer spending also nosedives when so many are jobless or fearful of losing their job.

Ireland might be celebrated as a fine exemplar of sound fiscal management, but it demonstrates powerfully the counterargument that a country cannot cut its way out of a re­cession and back to economic growth. Someone who apparently comprehends this is another finance minister who is fiercely proud of his Irish ancestry, Canada's Jim Flaherty.

Osborne has cited Canada as a model for deficit reduction, seeking Flaherty out for advice at the G20 summit in Seoul shortly after the Tories' election triumph. What has impressed advocates of neoliberal economics is the way Canada slashed its national debt from almost 80 per cent of GDP in the mid-1990s - when there were threats of the IMF being called in - to just under 15 per cent in 2007. With Ottawa recording annual budget surpluses at the beginning of the millennium, one supportive think tanker proclaimed this performance the "redemptive decade".

In fact, Flaherty's prime response to the glo­bal economic crash has been to adopt a strikingly Keynesian approach: he authorised a huge increase in federal expenditure in Canada's 2009 budget, and remains committed to deficit spending until the country is safely out of recession. Defending his stimulus plan this summer, he stated: "When you're faced with a country going into a recessionary dive, as we were in the last quarter of 2008, that is not internally generated, that comes from outside the country, what do you do?" He decided "to stimulate the economy with government money, with taxpayers' money, to replace the absence of private demand". It worked, and the IMF is forecasting that Canada's economy will grow 3.1 per cent this year and 2.7 per cent in 2011.

Canada goosed

In contrast to Osborne, Flaherty was no fiscal novice when he stepped into national office. He was finance minister of Canada's most economically powerful province, Ontario, when the treasury in Ottawa embarked on its draconian spending review. He remembers the pain of sharp cuts to education and health, and has said he would have done things differently back then.

Flaherty understands that one important reason the shrinking of his country's public sector was not more catastrophic was that the country's most vital trading partner, the United States, was in the middle of the prolonged, credit-fuelled Clinton boom, which helped to expand the Canadian private sector.

However, it should be emphasised that Flaherty hasn't metamorphosed from tight-fisted free marketeer into big-state spender. On a recent visit to Dublin, he praised Ireland, saying it had led Europe "in taking the necessary, courageous decisions towards fiscal consolidation". Yet, were he to spend more than a couple of days in the ould sod, it is questionable whether he would be as complimentary about his Irish counterpart's "resolve". If he were to witness first-hand the effects of austerity across this small island, as he did in Ontario, Flaherty might believe things should be done differently in Dublin - and London.

Rob Brown is senior lecturer in journalism at Independent Colleges Dublin

This article first appeared in the 25 October 2010 issue of the New Statesman, What a carve up!

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The New Times: Brexit, globalisation, the crisis in Labour and the future of the left

With essays by David Miliband, Paul Mason, John Harris, Lisa Nandy, Vince Cable and more.

Once again the “new times” are associated with the ascendancy of the right. The financial crash of 2007-2008 – and the Great Recession and sovereign debt crises that were a consequence of it – were meant to have marked the end of an era of runaway “turbocapitalism”. It never came close to happening. The crash was a crisis of capitalism but not the crisis of capitalism. As Lenin observed, there is “no such thing as an absolutely hopeless situation” for capitalism, and so we discovered again. Instead, the greatest burden of the period of fiscal retrenchment that followed the crash was carried by the poorest in society, those most directly affected by austerity, and this in turn has contributed to a deepening distrust of elites and a wider crisis of governance.

Where are we now and in which direction are we heading?

Some of the contributors to this special issue believe that we have reached the end of the “neoliberal” era. I am more sceptical. In any event, the end of neoliberalism, however you define it, will not lead to a social-democratic revival: it looks as if, in many Western countries, we are entering an age in which centre-left parties cannot form ruling majorities, having leaked support to nationalists, populists and more radical alternatives.

Certainly the British Labour Party, riven by a war between its parliamentary representatives and much of its membership, is in a critical condition. At the same time, Jeremy Corbyn’s leadership has inspired a remarkable re-engagement with left-wing politics, even as his party slumps in the polls. His own views may seem frozen in time, but hundreds of thousands of people, many of them young graduates, have responded to his anti-austerity rhetoric, his candour and his shambolic, unspun style.

The EU referendum, in which as much as one-third of Labour supporters voted for Brexit, exposed another chasm in Labour – this time between educated metropolitan liberals and the more socially conservative white working class on whose loyalty the party has long depended. This no longer looks like a viable election-winning coalition, especially after the collapse of Labour in Scotland and the concomitant rise of nationalism in England.

In Marxism Today’s “New Times” issue of October 1988, Stuart Hall wrote: “The left seems not just displaced by Thatcherism, but disabled, flattened, becalmed by the very prospect of change; afraid of rooting itself in ‘the new’ and unable to make the leap of imagination required to engage the future.” Something similar could be said of the left today as it confronts Brexit, the disunities within the United Kingdom, and, in Theresa May, a prime minister who has indicated that she might be prepared to break with the orthodoxies of the past three decades.

The Labour leadership contest between Corbyn and Owen Smith was largely an exercise in nostalgia, both candidates seeking to revive policies that defined an era of mass production and working-class solidarity when Labour was strong. On matters such as immigration, digital disruption, the new gig economy or the power of networks, they had little to say. They proposed a politics of opposition – against austerity, against grammar schools. But what were they for? Neither man seemed capable of embracing the “leading edge of change” or of making the imaginative leap necessary to engage the future.

So is there a politics of the left that will allow us to ride with the currents of these turbulent “new times” and thus shape rather than be flattened by them? Over the next 34 pages 18 writers, offering many perspectives, attempt to answer this and related questions as they analyse the forces shaping a world in which power is shifting to the East, wars rage unchecked in the Middle East, refugees drown en masse in the Mediterranean, technology is outstripping our capacity to understand it, and globalisation begins to fragment.

— Jason Cowley, Editor 

Tom Kibasi on what the left fails to see

Philip Collins on why it's time for Labour to end its crisis

John Harris on why Labour is losing its heartland

Lisa Nandy on how Labour has been halted and hollowed out

David Runciman on networks and the digital revolution

John Gray on why the right, not the left, has grasped the new times

Mariana Mazzucato on why it's time for progressives to rethink capitalism

Robert Ford on why the left must reckon with the anger of those left behind

Ros Wynne-Jones on the people who need a Labour government most

Gary Gerstle on Corbyn, Sanders and the populist surge

Nick Pearce on why the left is haunted by the ghosts of the 1930s

Paul Mason on why the left must be ready to cause a commotion

Neal Lawson on what the new, 21st-century left needs now

Charles Leadbeater explains why we are all existentialists now

John Bew mourns the lost left

Marc Stears on why democracy is a long, hard, slow business

Vince Cable on how a financial crisis empowered the right

David Miliband on why the left needs to move forward, not back

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times