Gillian Tett argues in the Ft today that:
Pity the Irish. In the past 18 months, Dublin has repeatedly unveiled commendably bold measures to fight financial crisis. First, it offered to guarantee the banks. Then it replaced its top regulator and central bank governor, and embarked on an unusually forceful effort to inject transparency into its troubled banks.
More remarkable still, it has also imposed a painful austerity plan, in a bid to reduce debt. This has hitherto been largely accepted by long-suffering voters; social cohesion still appears surprisingly high.
Yet, instead of being rewarded by the markets, Ireland is now in the crosshairs.
There is good reason for that, I suggest. The markets know what the economists don't, and that is that you cannot cut your way out of a deficit. It is impossible. Keynes showed that there is no reason why, in the absence of market intervention by government, markets should create something approximating to equilibrium (whatever that might be) AT, or even near, full employment. And yet without full employment, which means that you are utilising the assets available to you to best effect you have no prospect of raising the additional revenues that you require to clear past deficits. It is as simple as that.
So the markets are punishing Ireland for the very obvious fact that it has adopted a policy which the markets know will be bad for the people of Ireland, bad for those who want to trade in and with Ireland, bad for the value of assets in Ireland, bad for its prospect of repaying debt and ultimately fundamentally bad for the prospects of Ireland as a whole.
The politicians of Ireland make a choice. They made the wrong choice. The politicians of the UK want to replicate Ireland's choice.That is their error. That is what the opposition politicians in the UK need to say,time and again. And now is the time for arguing we must stimulate the economy, deliver a Green New Deal, create work, and spend our way out of recession because this is the only way that we can solve the problems we have.
And quite remarkably, and the evidence clearly shows this, markets know that to be true.
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create work,
But jobs are not created. Under free condition, people just start working when they choose don’t they?
If this is not true it means there is a powerful force operating to either grant us access to work or or deny it to us.
The question must then be: when we are all willing and able to work, what is stopping us.
This is not pedantry. It is pointing out a mind set that has submitted to modern day slavery. Yet we are supposed to be free to start work when we choose?
@Robin Smith
it really is time that you people stopped fantasising.
first, work usually replies capital. The vast majority of people do not own any capital. That is not their own fault. They have never been paid enough to accumulate it.
second, the owners of capital like an organised workforce. They do not want people turning up and leaving at will. You may not have noticed, but the rest of us have.
Third, this means that Labour has to be organised, both for the sake of the owners of capital, and on their own behalf.
Fourth, the owners of capital have an unfortunate habit of withdrawing labour opportunities from the market. An unfortunate fact for you, but true. Go back to one to see the consequences
therefore, are inevitably, labour markets are what neo-Keynesians call sticky. this is what differentiates them from neoliberals, who assume as you do that the world is perfect. How naive of you
unfortunately, neo Keynesians are also wrong. It still assumes the market will, eventually, after a period of stickiness create fully employment. As Keynes rightly pointed out, there is absolutely no truth to that. The consequence is that the government has to create jobs to provide the stimulus to the market to ensure that the people of the country re fully occupied to generate wealth that is required to ensure that no one need live in poverty, without the opportunity to work if they want it
This is economic reality
I suggest you try it sometime
Wasn’t it the seeking of full employment and the overconsumption that this brought responsible for the economic mess we are now in?
There is indeed no reason to assume that “full employment” will ever be reached, because the market does not employ the lowest of the low-skilled, because they are simply not required to produce output.
Do you really think everyone in this country is employable?
@Robert Stimler
It was irresponsible lending by banks that created the mess we’re in – not policies aimed at creating full employment
And unlike you I don’t hold my fellow human beings in contempt
I believe all have a contribution to make
It may not be financial – but so what? For many it will be – and we should allow for that
But to hold your attitude then leads to all sorts of really rather nasty things – with which the ConDems are flirting far too dangerously
@ Mr Murphy
Who’s fantasising? I’m just pointing out what is there. We can all see it and we all know it. So why are you resisting?
I am saying that you have submitted to the idea of wage slavery by accepting this reality by saying the jobs must be created when by natural right that is preposterous. And by doing so are proceeding to define a solution without taking care over root cause. No wonder you remain confused.
You are describing the effects, yes the reality, of a system that is already fully monopolised and deeply unjust I agree. Through the institutions of private property in land and privatised creation of the money. Both return the rental streams from land. The most valuable asset. That is why the corruption goes after them first. Duh! Your solution, focusing on the effects rather than cause, is to tax work and production in order to collect the rent. My solution is to tax the rent at source and let the worker proceed with freedom.
If these rents remain fully monopolised it is inevitable that capital will always accumulate into the hands of the land owner, seemingly the capitalist. Because the worker and producer, is paying ever higher rents and interest before they can take wages and save. Capital is not the problem. Rent is.
Production = Rent + Wages + Interest
Production – Rent = Wages + Interest
The law of rent.
Rent takes up all the gains in an advancing economy. This is made clear for all to see if only we take the care to look in the link below. It is irrefutable. This is why no labour saving device has ever been able to improve the lot of the worker and producer. While privatisation of these 2 social mal-adjustments remains, it never will.
Real Reform: Where Are My Wages Going Mr Osbourne?
So who is fantasising?
@Robin Smith
Oh God, the Georgists are ever with us
Look, I buy LVT
But it’s not a panacea
you cannot play golf with one club. You cannot run an economy with one tax
end of story
@Robert Stimler
If it is accepted that there is a significant number of people who cannot be employed, then it is no longer reasonable to expect them to look for work. Furthermore, there would then be a moral obligation on society to look after the jobless to a reasonable standard. Are you an advocate of citizens basic income? I am not sure you have thought through the logical and ethical implications of your position? It is certainly not one remotely reconcileable to conservative policy.
@James from Durham
Brilliant comment
Well said
Thatcher buried the post-war consensus aim of full employment as the market requires a certain level of unemployment as a means of keeping labour costs low. Social costs were no longer important as companies were told their only responsibilities were to shareholders. The depressing outcome of this policy was the total disregard for the wasted untapped source of labour – compare this to an easily accessible oil field left unexploited. It also legitimised worklessness as an acceptable lifestyle choice and so when the economy was booming the Blair government had to encourage immigration to fill the gap and keep wages down.
But back to Ireland, there is a cruel irony in the damage being inflicted despite it taking the actions deemed necessary by ‘the markets’. I disagree that ‘the markets’ opposed Ireland’s actions. Remember, according to Gideon, our AAA rating would be lost and we would have ended up like Greece if we didn’t follow Ireland in cutting aggressively. All Ireland’s experience tells us is the tendency for capitalism to destroy the weak. An entire state can be short-sold based on rumours perpetuated by financial institutions who stand to make big gains by it’s failure. No wonder Ireland looks likely to go cap in hand to the EU or the IMF as the markets smell blood and won’t lend unless punitive conditions are attached. Unfortunately Ireland (and Iceland before it) is too small to stand up to the banks and Gideon’s failure to stand up to these ‘vested interests’ shows even the UK is no longer strong enough to determine it’s own future and is at the mercy of the market. God help us!
@Richard Murphy
Oh God, the ad hominem attack.
Look, stop avoiding. I’m asking you to answer a simple question:
Jobs are not created. People just start working. So what is the thing that is stopping them? Why do you think that government needs to create jobs? That idea implies a power that can either grant or deny work against the will of the people.
You cannot solve poverty by dealing with the symptoms. You cannot solve such a great problem by treating the small and avoiding the big.
Its not over until the truth is out. Why are you afraid of it?
How much land do you own by the way?
The irish experiment is hardly unique or even an experiment, this kind of sadisistic dogmatism has been tried many times before.
Try googling for imf/world bank success stories, there aren’t any.
An experiment tries to test a certain hypothesis, this has been done so many times already, no sane investigator could expect different results.
So its not really an experiment, those responsible know exactly what they are doing, and what the results will be.
The global financial crisis is merely a cover for a year zero approach to social welfare.
@paul
Agreed
The Washington Consensus writ large
@Robin Smith
With the very greatest of respect (or very little, it’s up to you) your claim that “jobs are not created – people just start working” seems akin to the classic economist joke “let’s assume we have a tin opener”
Of course you can assume you have solved the problem and as such it has gone away
The rest of us, in the real world, will quietly ignore that for the very good reason that the assumption does not accord with the facts
Please don’t bother to waste my time again with such stuff
@Robin Smith
People don’t just “start working” as you put it. They are hired by employers. (Or, if they’re self-employed, they have to convince people to buy whatever they produce).
They will only get hired in sufficient numbers to produce full employment if there is sufficient demand in the economy. And government policy (fiscal and/or monetary) affects the level of demand in the economy. So to that extent, the government can either create jobs (as the last Labour govt managed to do, to some extent) or destroy them (as this govt is doing).
This is really basic stuff – A level economics, or even below that. It’s not rocket science.
@Richard Murphy
Thanks for the respect this time round 😉
Can you tell me why we are compelled to work for employers?
Simple question = simple answer
This is the mind set that has submitted to the contemporary injustice. That there is a greater power somewhere that either grants us work or denies it to us. Quite preposterous of course. Yet you are stuck without a coherent answer.
I live very much in the real and natural world. That says that if I choose to work I can start working. And if I choose not to work, I avoid it. That this seems unreal demands we ask why and do not stop asking until we have the answer? Are we free or not? Do we want to know, or not?
In the dream world I hear here, we must all beg for work, be grateful it has been granted to us and then be wage slaves. Or walk away into welfare. Have you submitted to that? Its not a world I choose to live in.
The original question stands: If we are all able and willing to work, what is it that is stopping us?
I think I have the answer to this question. It spans the political spectrum. And it could unite both worker and producer against the real enemy for the first time… if we choose it.
@Robin Smith
I have to say this – your style is annoyingly tedious. If you are seeking to persuade anything, then you are failing miserably.
Simple questions do not necessarily give rise to simple answers. Get out of kindergarten.
And get out of the world of silly assumptions. No one says a person has to work for an employer. In that case, who would the first employer be? Your assumption is clearly false. But the reality is that very large numbers of people do want to work for employers, for all sorts of good reasons.
Now deal with reality as it is or please do not post again with nonsensical rhetorical questions, which are just meant to annoy and reveal little of your intellectual insight, if you have one.