State should default on debt and leave euro, economist tells left-wing forum

AN IRISH big bang involving debt default and withdrawal from the euro is needed to take the economy out of depression, the United Left Alliance national convention was told at the weekend.

Terence McDonagh, an economist from NUI Galway, told more than 400 delegates from around the country who attended the convention in Dublin on Saturday that five measures implemented simultaneously over a 48-hour period would reinvigorate the economy.

The alliance’s forum focused on its future and how it might develop into a national party.

Formed before the last general election, the alliance comprises the Socialist Party, the People Before Profit group and the Workers and Unemployed Action Group as well as some independent members.

Prof McDonagh said he wished to propose a radical economic programme to address the economic “depression”. He said the country should default on its debt, leave the euro, build a single public bank, provide a jobs guarantee for all workers and nationalise the Corrib gas field.

By 2014, the State would owe €200 billion, €80 billion of which was to bail out the European banking system, he said.

A further €80 billion was attributable to “the elite’s refusal” to tax itself. “Irish working people and poor people cannot pay, shouldn’t have to pay and sooner or later won’t pay,” he said.

Arguments against default suggested there would not be any money in ATMs or to pay nurses or bus drivers; the solution to this was to leave the euro and print our own currency. This would take us out of the “euro madhouse” and allow us to reinflate the economy.

The creation of a new public bank, taking with it assets of existing banks, would leave behind a bad credit bank owned by shareholders, bondholders and the European Central Bank.

“If the ECB believes the bondholders should not be burned, they can pay them first,” Prof McDonagh said, to a round of applause. The Government should provide a jobs guarantee and “command unused labour resources for the common good”.

It should also purchase and develop domestic energy assets, including the Corrib gas field, he said.

Kieran Allen, head of sociology at UCD, told delegates the rich, capital class in Ireland were on strike. In 2007, they had invested €50 billion in the economy and in 2010 they only invested €17 billion. This was a deliberate strategy to drive down aspirations so they could bring through wage cuts, he said.

“It is an investment strike from the rich that is setting out to sabotage this economy,” he said.

Kevin McLoughlin, national secretary of the Socialist Party, said multinational and indigenous capitalists offered no way forward for the Irish economy.

He told delegates they should not be scared of the word socialism or socialist. The job of the alliance was to try to overcome the crisis on the basis of building a mass movement based on working-class people and young people.

“If we are hesitant about advocating those ideas and the ideas of socialist and socialism we are complicating our own task,” he said.