Ireland’s meaningless budget

AFTER WEEKS of carefully orchestrated leaking, Ireland’s 2010 budget was unveiled today and despite the obvious cuts and levies, it is an almost entirely meaningless document.

Many have commented on Brian Lenihnan’s references to Ted Kennedy during his speech, complaining it was irrelevant and bizarre. Nothing could be further from the truth: rambling on about dead American politicians has about as much to do with economic recovery as the government’s plan to… what was the point of that budget again?

Saying the government has delivered a traditional right-wing attack on working people is technically true but it masks the real lesson of the budget: an obsession with ‘producing’ wealth through farcical financial instruments rather than making a commitment to genuinely productive industry. Cuts to public services, the pay of civil service and public officers and welfare benefits are an arguable political point – one can either agree or disagree with them, but when it comes to rebuilding the economy it’s not only the banks that are bankrupt, the government has run out of ideas too.

News that the government wants to see Ireland become a hub for banking and financial services displays a continued commitment to the now totally discredited financialisation of the economy. As forth has continually argued, real economic activity is based in the production of goods and services which have actual use-values and exchange-values. (1) While most of the developed world has belatedly recognised this and moved to broadly Keynsian economic policies intended to stimulate employment growth and spending, the Irish government has elected to simply hope that the country can hang-on long enough to again ride on the coat-tails of productive economies.

Keynesian economics, of course, are no panacea and are widely discredited as ‘stagflationary’, meaning Keynesian interventionism results in stagnation and inflation. Ireland not going down the interventionist road does not mean that the country or government is ‘right-wing’ or ‘free-market’. Keynes was no socialist and implementing his policies would be no victory for the left. What is significant is that many of the countries most closely associated with business-led market capitalism such as Britain and the United States were never much interested in free markets anyway. Interventionist economics never really went away – the state has always provided life support to business. (2)

Given that, outside of Ireland at any rate, the wind is blowing in the direction of state stimulation of economic activity, forth argued in November that the government should direct its cash not to banks and bailouts but to large scale deployment of infrastructure projects as well as new technologies and new industries. (3)

Brian Lenihan’s budget does none of that, instead preferring to not only support financial fantasies, but actually make productive activity less profitable. Green minister for energy Eamon Ryan argues that his party secured ‘green stimulus’ in the budget. While the Greens certainly got the pork barreling into their preferred sector the party’s contribution to the budget has been to finish the job Fianna Fáil started – making industry less likely to be seen as a viable target for investment through rising the cost of doing business. Fiddling around with wind power as if it will ever make a significant contribution to meeting Ireland’s energy needs will do less than nothing to undo the downturn in industry that the carbon tax alone will create.

Neither party in Irish government gives a fig about production, the Greens because the party is ideologically opposed to it and Fianna Fáil because they are in love with politically useful fantasies about that post-material economy which attempt to paper over Ireland’s failure to develop during the twentieth century and the inability of Ireland’s business and political elites to get their hands dirty and get to work.

(1) Leader column: tomorrow’s budget for cut-price economics, forth, December 8, 2009
(2) State capitalism in Britain, James Heartfield, forth, December 9, 2009
(3) The state and recession, Jason Walsh, forth, November 9, 2009