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Cancel the Bankers’ Debt- VOTE NO TO AUSTERITY PACT

‘Political choices get reduced to Pepsi or Coke – to slight nuances of taste, slight nuances of policy, slight alterations of design to account for local traditions, some loosening here and there, but never any major deviation from the core golden rules… ’

This is what Thomas Friedman wrote in the Lexus and the Olive Tree, which was a wry but fulsome defence of neoliberal globalisation. There are supposed to be no real choices left and politics gets reduced to a PR game to choose which puppet will implement the rules of the market.

The EU fiscal compact is designed to ensure there is no escape from the golden straightjacket. It comes straight from the writings of Frederick Hayek, the founder of neoliberal economics.

It demands that governments never spend more than 0.5% above the revenue they take in.

If their overall stock of debt comes to more than 60 % of the economy, they must cut state spending by 5 % a year – regardless of the social consequences.

(Ireland’s debt level is about to reach 118 % of GDP – so there will be a lot of cutting to do.)

Even if Irish hospitals were on the brink of collapse because of understaffing, their spending would still be cut. No element of social justice or concern will stand in the way – the Irish state will be squeezed dry until it conforms to the rules laid down by a faceless bureaucrat in Brussels.

Governments will also have to submit their budget plans to an unelected EU Commission and will be pressured into harmonising its proposals with their wider guidelines. One example has already occurred: the EU Commission co-ordinated measures in different countries to raise the pension age this year.

Should a country not comply with these measures it can be brought to the European Court of Justice and fined. In the case of Ireland, the fine would amount to €155 million.

These draconian measures are based on a false and distorted analysis of why the global economy crashed in 2008. In an extraordinary sleight of hand, the global elite parrot the line that the problem was over-spending by governments and states.

The German Finance Minister, Wolfgang Schaube, who is one of the main architects of the fiscal pact, put it like this,

‘It is undisputed among economists worldwide that one of the main causes –if not the main cause of the turbulence - not just now - but already in 2008- was excessive public debt’.

This statement is entirely wrong. The Irish case demonstrates its total falsity as the diagram below illustrates. It shows that the Irish debt to GDP ratio stood at 25 % in 2007- which was way below the 60 % rule. But the crash still occurred because the root of the problem was not public spending but a private banking system that was out of control.

The elite, however, have no problem with lying.

During the Lisbon Treaty, they promised jobs if people voted Yes –but none arrived.

Even before the current referendum has begun, they are claiming that it is a vote about whether ‘we are in or out of the EU’. Yet there is no mechanism to expel countries either from the EU or even the eurozone. Britain and the Czech republic have already rejected this treaty and continue to remain members of the EU.

The real purpose of this referendum is to seal off local political elites from democratic pressures. The political establishments of Europe want to provide each other with political cover for the attacks they are mounting on their own people. They want to say that ‘it hurts us more than it hurts you – but we are bound by EU rules and we just have to do it’.

‘Debt breaker’ rules take no account of local conditions or particular economic problems. They are so stupid that their main advocates - up to now - are the extreme libertarian right who belong to movements like the Tea Party in the US.

In the name of individual liberty – in reality, the liberty of the rich – they seek to reduce the politicisation of economic decisions. Instead ‘economic governance’ is to be transferred to an ‘expert elite’ who are surrounded with corporate lobbyists who direct them to attack the conditions of working people. This crazy economics is now the main dogma of the EU elite.

The fiscal compact has been described as the longest and most boring suicide note in history. It is a recipe for permanent austerity that can only lead to the long-term decline of Europe. It is bad enough when one government – such as Ireland’s – tries to take the austerity route but when a whole continent follows a similar path, the market for goods and services will literally freeze up

The Socialist Workers Party will be mounting a vigorous campaign against this referendum.

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