“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” –Warren Buffet
Almost four years to the day after billionaire Warren Buffet candidly spoke those words, a bailout package was agreed upon by the European Union and IMF to give to Ireland[i][i], at the tune of $89. 4 billion (euro67.5 billion) in loans. It is meant to help the country with its massive banking crisis that has sent the Celtic Tiger crawling back to its cage. The money, however, comes with some conditions.
First, Ireland will have to repay the money at an average 5.8% interest rate, which is higher than the 5.2% Greece agreed to pay out. In other words, it is an astronomically high and unfair rate to enforce. Even with reasonable growth, it would be unaffordable. Speaking of growth, what are the other conditions?
Second, the EU and the IMF will require that Ireland engage in fiscal austerity. With the pretext of reducing the deficit, the government will have to basically cut social spending. This is going to have horrendous effects on the Irish economy, especially affecting the working class. Economist Robin Hahnel said, "This is going to do nothing but aggravate the recessionary pressures within those economies and … increase their rates of unemployment. Production is going to drop further, income will drop and that means tax revenues are going to drop.” But, hey, what really is important is that the private investors and the richer nations, like Germany and the United States, get their money back. Also part of this austerity program involves raising the sales, or value-added, tax to 23 percent, while the government pledges not to raise the already low corporate tax from 12 percent. Political economist Leo Panitch describes this situation of inequality, and how the United States corporations play a role:
And I might point out that the American corporations that have been the largest investors in Ireland in terms of manufacturing investment and exports from Ireland are threatening they'll pull out unless this 12 percent corporate tax is maintained. So you see the enormous class inequity that's built into this, the enormous demonstrations that have taken place in Ireland. And they're not new.
This is where Buffet’s brutally honest words come in. The conditions of this bailout, and the circumstances that created the need for a bailout, amount to nothing less than class warfare; and unless popular forces can resist it, the capitalists and their states who are waging it are going to come out on top, at the expense of the great majority of the population.
It is here that the Irish people have a chance to shine, and they have already been getting the ball rolling. On November 3rd, tens of thousands of students from all over Ireland flooded the streets of Dublin to protest the proposed increase of registration fees, even resulting in an occupation of the Department of Finance. On November 27th, over a 100,000 people came out on the streets of Dublin to protest the austerity measures. It was organized by the mainstream, moderate trade union leaders, but they did so knowing that they had to—the people were angry. Moreover, leftwing forces showed a strong showing, pointing out that more radical action is required if the Irish people are to weather the storm. Furthermore, the Irish people can shine if they are able to mobilize even greater numbers of people, and create a situation where their voices are not only heard but action in their favor is taken.
To do this, they need a plan of action and an alternative. Given the likely effects on the economy due to austerity, described above, Ireland’s best bet, according to economist Dean Baker, is to learn from Argentina and default on its debt and break from the euro. He says,
Ireland should study the lessons of Argentina. Breaking from the euro would have consequences, but it is getting increasingly likely that the pain from the break is less than the pain of staying in…What the people of Ireland and every country must realize is that if they agree to play by the bankers' rules, they will lose.
Then, Ireland should nationalize its banking system and turn it into a public utility under the democratic control of the populace. This does not mean merely putting public money into banks while demanding no executive powers. Panitch, discussing such a proposal for all countries, says, “I mean taking the banks properly into public ownership and changing the function of the banks, as Mitterrand did not do in France in the 1980s, so that the criteria on which they invest are redefined as social purposes, to be democratically determined.”
The people of Ireland are at a crossroads. They can accept austerity and watch their economic situation deteriorate; or they can take bold action and do what is necessary to limit the long-term suffering of the majority, as well as protect against further crises. They have the opportunity to set an example for the countries that are next on the austerity hit list—notably Spain and Portugal—and for the people in the richer countries, like the United States, as well. They can show us that when Warren Buffet’s class, the rich, capitalist class, wages war on the working class, there will be resistance, and we do have an alternative.[ii][ii] Will they be able to exclaim with confidence, “We won’t pay! We will win!”?
[i][i] For the sake of this blog, I will use the term “Ireland” to describe the 26 counties that compromise the south of Ireland but are referred to as the “Republic of Ireland.” The true Republic of Ireland also consists of the 6 counties of Northern Ireland that are still under colonial British rule. Many of the progressive forces fighting austerity also seek a united 32 County Ireland, myself included.
[ii][ii] This is a link to an article I wrote on an alternative economic system to capitalism, called participatory economics.