Right-Wing Think Tank Praised Ireland's 'Economic Freedom' ... and Then Its Economy Crashed
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Austerity is another word for abandonment in the context of economic crisis. It means that the most vulnerable and the most in need will be abandoned to their fates by politicians and political parties as public money is used to bail out the very entities whose activities caused the crisis in the first place. No one wants to join or celebrates joining the ranks of the undeserving poor, but in the context of the "new normal" that's what we are, or what we are a paycheck or two away form becoming. Those of us who feel comfortable in our middle class status know somewhere in our hearts and are often wakened in the middle of the night by anxious thoughts of how close we are to tumbling permanently down that ladder — permanently, because the ladder is being pulled away, or sawed off at the bottom.
Ireland's government may yet just douse that ladder with gasoline and set it aflame. The price of the bailout set by the IMF and Ireland's partners in the E.U. has turned out to be more austerity — a four year plan that heap more economic pain on the Irish people, but leaves the most destructive elements of the Irish economy untouched.
The budget calls for cuts of nearly 15 percent in Ireland’s social welfare budget, one of Europe’s most generous, saving 3 billion euros a year. Some 24,750 public jobs — a huge number in a country of about 4 million people — would be eliminated, cutting state payrolls down to about what they were in 2006 and saving about 1.2 billion euros a year. Child benefits other social welfare payments would be reduced, and the nation’s minimum wage, now 8.65 euros ($11.59) an hour, would be cut by 1 euro in the hope of promoting job creation.
The country’s tax net would be widened to take in some low-income workers who currently pay no tax, and a series of new taxes would be imposed on certain residential properties, as well as on 120,000 people who receive public sector pensions.
But the budget plan does not touch Ireland’s very low corporate tax rate of 12.5 percent, which has helped to lured companies like Microsoft, Intel and Pfizer to set up operations in the country. Though the country’s political parties are bitterly divided over many aspects of economic policy, they all agree that the low corporate tax rate is one of the few pillars that can allow Ireland to return to economic health. Multinational companies employ about 1 out of 7 working people in Ireland, and their businesses are stoking export growth, even as the latest austerity program is expected to depress consumer demand and touch off a wave of retrenchment and job losses.
For Ireland, the potential cost of austerity may be a hollowed out society; in which a discredited political elite holds power, while an angry, abandoned and increasingly poor population chase a shrinking number of jobs. In other words, a somewhat new twist on an old socio-economic model.
According to Friedrich von Hayek, the development of welfare socialism after World War II undermined freedom and would lead western democracies inexorably to some form of state-run serfdom.
Hayek had the sign and the destination right but was entirely wrong about the mechanism. Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests are what ended up undermining democracy both in North America and in Europe. All industrialized countries are at risk, but it’s the eurozone – with its vulnerable structures – that points most clearly to our potentially unpleasant collective futures.