OPINION:Unions are not saying we should spend our way out of the crisis. But investment in jobs is no less than vital, writes PAUL SWEENEY
EVEN AT this late juncture, with the Government hell-bent on restoring the economy to health by sucking all life from the patient, it would be helpful to engage in a robust, mature debate about the nature of the crisis we face and how we might emerge from it.
Unfortunately, certain commentators have opted instead for cheap caricatures and gross simplification of any view which does not accord with the official prescription.
Economist Pat McArdle provided a prime example in yesterday’s edition – under the headline “Exchequer returns show fiscal rectitude can work” – in which he misrepresented the trade union position as one of “spending our way out of recession” and claiming that unions (and others) are less vocal as “the absurdity of the suggestion becomes ever more obvious”.
We have never advocated spending our way out of recession and are not aware of others who have. But we do take exception with what US-based columnist Paul Krugman calls the “deficit fetishists” – who insist the only option is to cut, but who have absolutely no plans to create jobs or have any strategy for growth. That position is popular among right-wing Republicans, the British Tories and Fianna Fáil/Greens.
Indeed, Krugman has previously written in The Irish Timesof how these "fiscal scare tactics" have sought to stifle debate and ensure only one view is heard: "To me – and I'm not alone in this – the sudden outbreak of deficit hysteria brings back memories of the groupthink that took hold during the run-up to the Iraq war . . . Now, as then, those who challenge the prevailing narrative, no matter how strong their case and no matter how solid their background, are being marginalised."
McArdle asserts that the harsh cutbacks already imposed have worked. And this on the very day when it was reported that unemployment was up yet again to 13.7 per cent – the jobless figures now having trebled since 2007. But even this is only a partial picture.
When you add the tens of thousands who are staying in education and the tens of thousands who will emigrate and the many thousands who work part-time because full-time work is not available, you have a “real” unemployment level of some 18 per cent.
Thus far, the Government’s only plan for the jobless is to cut their payments, forcing them into poorly paid work or that last resort of successive Fianna Fáil administrations – forcing them to emigrate.
This is not success, it is a recipe for a deeper, prolonged recession.
Trade unions have put forward several initiatives aimed at creating or protecting jobs – often with the support of employer bodies. Call us naive or call us reckless, but we are convinced that there can and will be no sustainable recovery until the numbers out of work start to fall. That is the acid test of any putative recovery.
Not so, the “green shoots” brigade: armed with electron microscopes and vivid imaginations, they detect imminent growth and renaissance, just around the corner. And it is always “just around the corner”.
There are two broad views on how to emerge from the crisis internationally. On one side are the Government and bodies like the OECD and the International Monetary Fund. On the other are voices such as columnist Paul Krugman, Joe Stiglitz, Prof David Blanchflower and governments such as the United States. It is now widely recognised that without the massive stimulus packages in the US and Europe, the recession would have become a deep, deep depression.
Indeed, Germany has seen a fall in unemployment – down to 7.5 per cent – over the past year, due to its government-supported short-time working and stimulus programme. A recent survey by the Financial Times found that countries where governments actively intervened in the labour market to save and create jobs – as opposed to the laissez-faire attitude that prevails here – the unemployment rate had been kept down.
That is investing your way out of the recession.
The only area where rampant, runaway spending is being used to counter the impact of the crisis is in the attempt to prop up the private banks that brought the economy down, particularly the black hole that is Anglo Irish.
It is worth reminding ourselves that our economy has been through the biggest fall in the world – 20 per cent of gross national product – from peak to trough. A crude programme of spending cuts cannot possibly remedy that collapse.
If the Wall Street Journal– the cheerleader for the deregulation, tax-cutting, fundamentalist free-market economics which led to the great crash – says Ireland is on the right course, then it is not green shoots we should be watching out for but icebergs.
Paul Sweeney is economic adviser to the Irish Congress of Trade Unions