A Happy New Year?

Harry McGee’s report in the Irish Times suggests the one to come will be worse than the one past. The economic programme, to which Ireland has been subjected in order that it may pay for the speculative losses of a small elite, is to worsen.  Further tax rises, spending cuts and attacks on the vulnerable are part of the IMF programme for Ireland, and if anyone thinks this bodes well, the experience of Africa in the 1980s and 1990s is a salutary tale.

Richard Dowden, Director of the Royal African Society, wrote:

Africa’s economies were handed over to World Bank and IMF economists. “Structural adjustment” introduced a dose of tough economic medicine that would restore the patient to health. Governments were forced to let the “free market” decide the value of their currencies, cut public spending and sell off their assets.

As a theoretical economic solution it might have looked right, but on the ground in Africa it pushed up prices, impoverishing all but a few, and destroying Africa’s professional classes by reducing the value of their salaries. Those in power who had mismanaged things so badly, now sold run-down state assets to themselves at knock-down prices.

Reading Harry McGee’s summary of the Troika’s plans for Ireland in 2012, there are echoes of the policies that left Africa poorer and a small number of people hugely richer.

Structural adjustment programmes attacked the middle classes in Africa,directly reducing their salaries.  The IMF is intent that a similar path be pursued in Ireland.  Given that the poor have no money upon which to pay tax, and that the rich have schemes to avoid it, the broadening of the tax base will directly affect middle earners.   The IMF believe a reduction of tax credits and lowering of thresholds are necessary:

However, while the Government has promised no changes to income tax rates, bands or credits, IMF staff concluded that broadening the tax bases ‘will likely need to encompass tax bands and credits’.

A further placing of the burden of the cost of the greed and incompetence of the small group of insiders upon the shoulders of working people is to accompanied by the privatisation of state assets:

The disposal of State assets has led to ongoing disagreement between the troika and Government and will play a major part in this month’s discussions. The Government has committed to divesting only €2 billion in State assets while the IMF has suggested €5 billion. The Government may agree to a higher figure this month, but only if a portion of the proceeds are used for jobs stimulus rather than debt reduction.

Of course, in the midst of a deep recession, assets will be sold for values far below those of normal times, and who will buy them? Who is there left with money? The powerful who made money during the boom and foreign investors.  Assets built up with taxpayers’ money over decades are to be given to the powerful to pay the debts incurred by the powerful.

A happy new year.