Julie L. MacArthur: From Fenians to financiers -- James Connolly and the Irish meltdown

(Originally read a revised edition "Mortgaging Ireland: Financial Crisis & Socialist Resistance" published in the March 2011 issue of Monthly Review)

From Fenians to financiers: James Connolly and the Irish meltdown
By Julie L MacArthur
Rabble (Canada)

A spectre is haunting Ireland -- the spectre of James Connolly.

Connolly was executed by a British firing squad for his role in Ireland's 1916 Easter Rising for home rule. Celebrated as a hero of Irish independence by political parties of both the left and right in Ireland, his socialism is all too conveniently overlooked.

It is vital, however, to consider it, for the Irish struggle is one that speaks to the challenges of independence, sovereignty and democratic freedom, both at that time and now. And it is significant for the people of Ireland and of all countries. What value is formal political independence if it is not backed up by economic control; if the real decisions of public policy are made in boardrooms and backrooms rather than main streets and parliaments?

For Connolly:

"If you remove the English army tomorrow and hoist the green flag over Dublin Castle, unless you set about the organisation of the socialist Republic your efforts would be in vain. England would still rule you. She would rule you through her capitalists, through her landlords, through her financiers, through the whole army of commercial and individual institutions she has planted in this country and watered with the tears of our mothers and the blood of our martyrs." (Socialism and Nationalism, p25)

Now back to present-day Ireland.

A who's who of global finance descended upon Dublin in November to "hoist their flags," from the International Monetary Fund (IMF) and the European Central Bank (ECB), to the Rothschild investment bank, Merrill, Barclays, JP Morgan and Goldman Sachs. These power brokers arrived to prevent "contagion" from the financial crisis in this small country of 4.5 million people by lending the Irish state billions of euros to recapitalize insolvent banks and shore up the country's finances.

Unfortunately for the Irish, these actors came armed with the same ideological and policy tools that caused the crisis: a commitment to neoliberal growth models, open markets and the primacy of financial interests over those of labour, sovereignty or independence. Moreover, alternative ideas and paths are lacking from elites in Ireland's two major parties, Fianna Fáil and Fine Gael, as both are proven devotees of this free-market fundamentalism. It was their desire, proclaimed loudly through the 1990s and 2000s, to be "closer to Boston than Berlin" in regulation and finance.

Debt: to infinity, and beyond

The reasons for Ireland's economic collapse have been well covered by the global press in recent weeks. These include: an unsustainable growth model built on extremely low corporate taxes (12.5 per cent) and multinational inward investment, a property bubble fueled by cheap international credit, and politicians far too cozy with domestic banks and developers to regulate them sufficiently.

What is rarely highlighted in the press is the fact that Irish public spending was the casualty -- not the cause -- of the crisis. When Lehman Brothers investment bank collapsed in 2008 and credit markets seized up, Ireland's property bubble burst. As a result, a significant portion of bank assets became worthless and the country's construction and property sectors came to a standstill. The Irish government recapitalized banks with government bonds (totaling more than 176 per cent of GDP in 2009) in return for worthless property assets.

Dublin announced the deepest spending cuts in the history of the Republic to meet the conditions of the Nov. 28 €85 billion IMF and European Central Bank (ECB) loan. The state plans to raise income and sales taxes by €5 billion and cut spending by €10 billion by: reducing welfare payments by €3 billion, eliminating 25,000 public sector jobs and raising sales taxes by two per cent (to 23 per cent) by 2014.

According to economists Simon Johnson and Peter Boone "each Irish family of four will be liable for €200,000 in public debt by 2015." In all, €20.7 billion from the public pension fund was funneled to the banks over the last year and a half.

Perhaps most significantly, the Nov. 24 national budget plan outlined no change in the corporate tax rate of 12.5 per cent (one of the lowest corporate tax rates in Europe) "under any circumstances."

There were alternatives. The government could have required creditors to bear a share of the costs by allowing defaults and some bank failures. They could also have required the companies who have benefitted for years from the corporate tax policy to pay an equal share. Google, for example, reportedly saved $3.1 billion in taxes over the last three years by setting up in Ireland.

More recently, calls to withdraw from the European Monetary Union (EMU) have emerged in order to follow Iceland's lead of currency devaluation (an option denied Ireland). They chose to draw from the public purse instead.

While the IMF is asserts that its work pushing austerity in Ireland is ‘technical not political' the Irish public disagrees, and so do I. What could be more political than the socialization of bank debts and transfers of public wealth in to private hands?

Popular backlash

As the costs of propping up corrupt officials, developers and international bankers becomes increasingly unpalatable, politics in the Republic is shifting left; according to a Dec. 2 poll, Sinn Fein - "we ourselves" in Irish -- is two points higher than the ruling party Fianna Fáil. They won a historically unprecedented by-election seat in Donegal on Nov. 25 and their support in the south has doubled in the past month, from 8 per cent to 16 per cent. Political heavyweight Gerry Adams is giving up his seat in Westminster to run in the Republic's early 2011 election. These gains have opened up the possibility of a coalition with the Irish Labour Party in the New Year. This represents a colossal swing in post-independence Irish politics dominated by 60 years of rightist Fianna Fáil and Fine Gael.

Political opposition to the status quo also transcends electoral politics. On Nov. 27, 2010 close to 100,000 people (the equivalent of 785,000 in Canada) marched through the streets of Dublin. The banners and placards quoted Connolly and other heroes of Irish independence. These protests have been growing in size and frequency over the past year.

Such political developments may be short lived. Free-market party Fine Gael is also gaining politically as more conservative voters swap one establishment party for another.

Furthermore, nearly one in three Irish youth are predicted to leave the country in coming years, to make ends meet in countries like Canada and Australia, thus eroding some momentum for change. Finally the Congress of Irish Trade Unions (CITU) -- the organizer of the largest and most recent rally -- is seen as tainted by years of "social partnership" with ruling parties. Taken together, these factors may undermine the development of a cohesive and coherent political countermovement.

To Read the Rest of the Essay

History for the Future: Rick Wolff on Housing and the Economy

Rick Wolff on Housing and the Economy
History for the Future



This week, guest Richard D. Wolff returns to HFTF. A professor of economics emeritus at the University of Massachusetts-Amherst, and most recently the author of Capitalism Hits the Fan: The Global Economic Meltdown and What To Do About It (2009), Rick was on the show in April discussing the economic crisis and the changes that have taken place in the way capitalism works since the 1970s. In this new episode Rick talks about the origins and significance of the housing crisis facing the United States.

To Listen to the Interview

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Eminent Domain Outrage in Connecticut: Pharmaceutical Giant Pfizer to Leave New London, Site of Major Housing Battle
Democracy Now

Homeowners in New London, Connecticut took on the city’s leaders after they announced plans to condemn all of the homes in one neighborhood to make way for a private development project for pharmaceutical giant Pfizer. The city said it would bring in thousands of jobs. After a 2005 Supreme Court ruling against the homeowners, the entire neighborhood was bulldozed. This week Pfizer announced it is shutting down its research center.

Guests:

Dana Berliner, senior attorney at the Institute for Justice. She represented the homeowners in Kelo v. New London, in which the US Supreme Court ruled that cities could condemn property because other uses may produce an increase in tax dollars and jobs.

Michael Cristofaro, resident of New London, Connecticut, who lost his home in 2006 to eminent domain.

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Guest: Greg Gordon
Host: Amy Goodman and Juan Gonzalez
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A five-month investigation by McClatchy Newspapers has revealed that Goldman Sachs made secret bets against the housing market while simultaneously selling off billions in soon-to-be worthless securities. In 2006 and 2007, the bank reportedly peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in US housing prices would send the value of those securities plummeting.

Greg Gordon, Investigative journalist with McClatchy Newspapers. He just published a multi-part investigation of Goldman Sachs and how it secretly bet against the housing market.

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