Our love affair with markets will lead to ruin

WE now face into an election which is unlikely to result in substantial changes to the provisions of the budget and Finance Bill.

These provisions will ensure a massive transfer of wealth from not-so-well-off to very-well-off. Our own politicians, the IMF, the ECB and the EU have all told us there is now “no other show in town”. Given that the policies of the above pundits are likely to drive us into a long and deep recession, perhaps those same policies need to be looked at in their historical context.

By the 1950s, the US had very successfully come out of The Great Depression of the 1930s. Roosevelt had deliberately boosted employment with public works and increases in public service numbers. He had also improved social security, public healthcare, and worker’s rights provisions and pensions.

So far, so good? Well, corporate America didn’t think so. Corporate America longed for a guru, a warrior who would turn back the tide of “unrestrained” welfare. Fortunately, such a guru was at hand in the person of one Milton Friedman of the Chicago School of Economics. Friedman declared the markets to be the only true regulator of economics. “Deregulate, privatise, tax rich and poor at the same rate, let the markets decide prices and wages, abolish the notion of a minimum wage and, above all, cut and cut again if necessary,” intoned Friedman. Heady stuff and corporate America loved it.

Soon, the Friedman gospel was everywhere. In Britain, Margaret Thatcher privatised British Telecom, British Gas, British Airways and British Steel. She succeeded in increasing homelessness and unemployment. But corporate Britain was doing well.

Meanwhile, Ronald Reagan set about winding up any of the gains made by ordinary Americans under the new deal. By 1989, America had a fast shrinking middle-class and greater poverty than it had in 1979. But corporate America was doing well. Here in Ireland, a new party devoted to laissez faire austerity economics (laissez faire economics for the business elite, and austerity economics for everyone else) reared its head in the PDs. The PDs were not too keen on regulation. Now that the Irish state has had to virtually nationalise most of its main banks, and now that not a few of our bankers have disappeared with very large sums of taxpayers’ money, there is a deafening silence from Mary Harney on the subject of the evil empire of state enterprise.

However, though Ms Harney and her fellow believers in Fianna Fáil and Fine Gael may for the present be silent on the subject of state control of banking, the economics they tout will continue to increase inequality and hardship. It is nonsense to claim that cutbacks in employment, health and education will not hit frontline services and general wellbeing. If we accept the main provisions of the current budget as inevitable, then we should be under no illusion about the consequences that flow from that acceptance.

Bill O’Sullivan

Douglas

Cork