European Politico-economics QA Mega-thread - Page 151

GREECE is being told to follow Ireland’s crisis solution of harsh austerity and acceptance of bank-and-bailout debt. This narrative conveniently ignores that the Irish ‘recovery’ has been built on major human rights violations and the undermining of long-term social and economic development.

Health spending has been cut by 27% since 2008, resulting in an 81% increase in the number of patients waiting on trolleys and chairs in emergency departments.
Health spending has been cut by 27% since 2008, resulting in an 81% increase in the number of patients waiting on trolleys and chairs in emergency departments.

There is a dark side to Ireland’s ‘success’ that requires discussion about the most effective responses to financial and fiscal crises.

The eight austerity budgets between 2008 and 2014 involved €18.5bn in public-spending cuts and €12bn in tax-raising (revenue) measures. Key public services, in particular health and housing, have been weakened as a result.

Public service staff have been reduced by 10% (37,500). Health spending has been cut by 27% since 2008, resulting in an 81% increase in the number of patients waiting on trolleys and chairs in emergency departments. One-third of all children admitted to hospital suffering with mental-health difficulties have been put in adult wards and the waiting lists for youth mental-health services have increased to 2,818 people.

Funding for local authority housing was cut from €1.3bn, in 2007, to just €83m, in 2013. This meant a loss of 25,000 social-housing units. This is a major contribution to the homelessness crisis, with 1,000 children and 500 families now living in emergency accommodation in Dublin. Because of the decision to prioritise bank recapitalisation and developer debt write-down, homeowner mortgage arrears have escalated.

There are 37,000 homeowners in mortgage arrears of over 720 days, and legal repossession notices were issued to 50,000 homeowners.

The cuts to welfare have had devastating impacts.Affected areas include lone-parent supports, child benefit, youth payments, fuel, back-to-school clothing and footwear, rent supplement, and disability and carers’ allowance.

But charges were introduced where they did not exist before — putting a further burden on lower-income households. These charges are ‘regressive’, in that they were not tailored to income level. These include water, property, school transport, prescription, A&E and chemotherapy charges. Fees have effectively been reintroduced at third-level (increasing from €1,000 to €3,000). This will have major implications for participation rates from lower-income households.

Funding for local community development, youth organisations, drugs prevention, family support, and to combat rural and urban disadvantage was disproportionally hit. Programme funding was reduced by 50%.

We are likely to see the long-term social impacts of these cuts in the further exclusion from the labour force of youths in disadvantaged areas. Issues of drugs and crime will surely worsen.

An EU report on the impact of austerity showed that the quality of secondary- and primary-level education has also been reduced, with fewer teachers, rationalisation of teacher/student support services, and the abolition of school grants.

The report links early school-leaving to austerity measures, which are highly concentrated in low-income areas. This, along with the cuts in funding to third-level, will seriously damage our education system, the core of the country’s economic development.

Hundreds of thousands of families and children have been pushed into poverty. The child-poverty rate rose from 18%, in 2008, to 29.1%, in 2013.The deprivation rate increased from 26.9%, in 2012, to 30.5%, in 2013, while for lone-parent families it has risen to 63%. Food poverty affects 600,000 (up 13.2%). Austerity has also devastated rural areas and small towns, with unemployment levels remaining much higher in the south-east.

In one of the most disturbing pieces of research into the impact of austerity, UCC and the National Suicide Research Foundation found an increase in self-harm rates of 31% in men, and 22% in women, between 2008 and 2012, while the male suicide rate is 57% higher (that’s 500 additional deaths). They cited a number of factors, including reductions in public expenditure, cuts to welfare, substantial healthcare cuts, falling house prices and personal debt.

Capital expenditure on important public infrastructure, such as hospitals, schools, roads, transport, broadband, water and wastewater was drastically reduced, by 60%, between 2008 and 2014.

Such spending on infrastructure is the bedrock of sustainable and competitive economies, and the lost decade of investment in these will leave Ireland’s economy much more vulnerable into the future.

Don’t forget, also, €17bn of our national pension reserve — which was available to fund infrastructure development and future pensions — was put into the bailout.

The commitment by Irish governments to pay all the bank- and crisis-related debt will damage our long-term social and economic development, and result in ongoing crises in health, housing, and mental health, and in rising poverty and inequality. This is because funding that should be going to these much-needed public services will, instead, be going on debt interest payments. Debt interest payments rose from €2bn (3.4% of tax revenue), in 2007, to a staggering €7.5bn, or 18% of all tax revenue, in 2014. These interest payments will enforce a form of permanent austerity in the coming decade.

Then, there is the often-forgotten issue of forced emigration. Almost 10% of Irish young people emigrated during the recession and emigration worsened as austerity intensified. It rose from 20,000, in 2009, to 50,000, in 2013. Without emigration, the unemployment rate would be 20%.

Finally, almost half of Ireland’s dramatic increase in GDP is from multinational activity, which does not take place in Ireland.

Thus, much of Ireland’s growth is based on facilitating some of the most profitable global corporations and financial services in reducing the tax they otherwise would have to pay to countries across the world. This is an unethical, unfair, and ultimately unsustainable form of economic activity.

It is clear, as highlighted by a recent assessment by the Irish Human Rights and Equality Commission, that austerity hit the most vulnerable and marginalised the hardest in Ireland. But there was, and remains, a choice about how countries such as Ireland and Greece, and the Troika, respond to debt and financial crises. Debt relief is an important option, as is taxing the wealthy, financial services or higher incomes, rather than taking it from public services, the poor and middle-income earners. The Troika and Irish governments favoured the latter and we can see the human misery and economic damage caused, as a result.

The Irish austerity-and-recovery model is being misrepresented on the international stage and should not be followed by Greece or other crises countries.

The Irish case actually points to the human and economic necessity of debt relief and alternative approaches to fiscal crises.

Dr Rory Hearne is a lecturer in the department of geography and faculty of social sciences at Maynooth University

Let's imagine a situation. Let's imagine that times have been good for you and you decided to buy a house, a house that you always dreamed of, a place that you can call home. The only problem is that this place is a bit pricey, certainly a stretch financially but what the hell, times are good, your credit rating is just fine and the guys at the bank just love you.

Alas, the economy takes a downturn, your job isn't as secure as it used to be and the boss is muttering darkly about downsizing and wage cuts. Now those mortgage payment instead of being steep become vertical so you go to the bank and decide to ask them if some kind of deal can be made. They look at you aghast, they had no idea that you are unable to meet your financial commitments, otherwise why would they have sent you all those credit card applications or phoned so insistently wondering if you want a loan for a new car/holiday/kid's dental work/shopping/home extension. They are shocked, shocked to hear that you have been so profligate with their hard earned cash, how on earth could you have deceived them in such an underhand manner?

But rather than lose a long standing customer (and a house they'd never sale for money you paid for it) they decide to offer you a loan to cover your debts. The problem is that this loan comes with some pretty severe conditions, no more outings, eating in restaurants is a thing of the past, also the kids really should leave home, they're a drain on your resources and frankly, granny's presence puts the family budget over the edge.

Grudgingly, you accept the terms, what else can you do? The problem is that the job market is still not getting better, the boss is demanding ever greater "flexibility" when it comes to salaries and that loan you just took out to cover the mortgage is still just beyond your pay grade. No matter how low the interest payments are, they are piling up and up.. So you go back to the bank and explain the situation, maybe rather than foreclose they could be persuaded to cut the total loan and allow you to pay, at least some of it whilst keeping a roof over your head. The mere suggestion is enough to make them choke on their mid-morning lattes and you get the impression that all is lost.

Yet, these are finance professionals and they know that a foreclosure would not only look bad for the bank, it would also not do their careers any good at all so they come up with a compromise solution. this time they'll issue you a credit card to draw upon when you need to pay the next installment of the loan you took out to cover your initial mortgage. Your kid's college fund will have to go, and that pension plan you took out is way too extravagant for a family of YOUR means. While you look dumb struck, they add a final condition,"you have to sell the family car". But how will you get to work or find a better job without a car? "No", they say, "a car is simply a luxury you can no longer afford, the price of petrol alone means it's not a viable option. Have you considered cycling to work?"

Without a car you cannot earn enough to pay off the credit card installment which you needed to pay off the loan you took out from the bank to pay back the mortgage you had with them. You refuse, saying the conditions are unacceptable.