Look at Ireland through the eyes of an austerity hawk. Then you’ll see the kind of success that gives people like the folks at the Heritage Foundation a warm fuzzy feeling inside. Keep in mind where austerity has brought Ireland thus far.
I keep an eye on news about Ireland’s economy, because it’s regularly held up as an example we should follow here. At least in the headlines. Read a bit deeper, and it’s a different story. Take, for example, a recent New York Times article about Ireland and austerity. p>In my browser, the header for the NYT article blares, “Ireland’s Austerity Hailed As Example of Financial Survival.” The headline tells a somewhat different story: “In Ireland, Austerity Is Praised but Painful.” Deeper into the article lies the truth: Ireland’s austerity is praised, painful, and not working.
... Ireland may be “playing a good-boy role and not making noises like the Greeks,” but it hasn’t been rewarded with anything resembling a recovery. In consumer-driven economy, a 3.8 percent drop in retail sales -- even on basic goods, like textbooks, shoes, clothing, etc. -- does not a recovery make. If anything, Ireland’s working- and middle classes are being squeezed even tighter. One nursing assistant whose salary has been cut told the reporter “a lot of people are just trying to get by week to week.”
And the result? There have been signs of improvement, but not enough to solve Ireland’s problems through austerity alone. The problems that led Ireland to seek a bailout haven’t gotten noticeably better. Growth forecasts for 2012 have been cut in half, to less than 1 percent, in part because of the austerity policies, which the Economic and Social Research Institute in Dublin called “reminiscent of policy during the Great Depression, when a mounting crisis was confronted by an orthodoxy that resulted in great poverty that could have been avoided.”
It’s not going to get any better, because austerity is also costing Ireland a generation’s worth of “brain drain.” The article says 40,000 have fled the country for better futures elsewhere. That exodus of mostly students and construction workers in 2008 may have kept unemployment in Ireland lower than it has been. But now, the article says, high-skilled professionals are pulling up stakes and leaving the country, taking their families with them.
Think about that. Instead of “playing the good-boy role” and bearing the burden of the bailout as demanded of them, Ireland’s working- and middle-classes are getting while the getting’s good -- taking their earning power and revenue-generating potential with them. So, Ireland’s austerity policies have effectively reduced its best hope for increased revenues and recovery: Irish people who are working, buying goods and services, and paying taxes.
Now, to people like Krugman and myself, this sounds like a nightmare. This is not an economy that’s turning a corner, so much as an economy that’s circling the bowl.
As Krugman said in his post, this is like calling Latvia a success. And it is, depending -- once again -- on how you look at it. That last link leads to a Naked Capitalism post to which Krugman linked, which explains how Latvia and other Baltic states have “discovered a new way to cut unemployment and cut budgets for social services”: make conditions miserable enough that people of working age decide to get the hell out of Dodge. Ireland’s already headed in that direction, so if Latvia’s a success then Ireland is well on its way to becoming the next global economic success story.
So, then, what does that make Iceland? Krugman posted a chart last week comparing Latvia’s real GDP to Iceland, and pointed out the 24 point spread between the two. Why such a big difference? Krugman explained what the austerity doctrine sweeping Europe, and threatening own economy, requires.
But it's worth stepping back to look at the larger picture, namely the abject failure of an economic doctrine -- a doctrine that has inflicted huge damage both in Europe and in the United States.
The doctrine in question amounts to the assertion that, in the aftermath of a financial crisis, banks must be bailed out but the general public must pay the price. So a crisis brought on by deregulation becomes a reason to move even further to the right; a time of mass unemployment, instead of spurring public efforts to create jobs, becomes an era of austerity, in which government spending and social programs are slashed.
This doctrine was sold both with claims that there was no alternative -- that both bailouts and spending cuts were necessary to satisfy financial markets -- and with claims that fiscal austerity would actually create jobs. The idea was that spending cuts would make consumers and businesses more confident. And this confidence would supposedly stimulate private spending, more than offsetting the depressing effects of government cutbacks.
We’ve already seen what the austerity doctrine has done for Ireland. Iceland, as Birgitta Jónsdóttir explained, went another route.
If the 99% want to reclaim our power, our societies, we have to start somewhere. An important first step is to sever the ties between the corporations and the state by making the process of lawmaking more transparent and accessible for everyone who cares to know or contribute. We have to know what is in that law sausage; the monopoly of the corporate lobbyist has to end - especially when it comes to laws regulating banking and the internet.
The Icelandic nation only consists 311,000 souls, so we have a relatively small bureaucratic body and can move quicker then in most countries. Many have seen Iceland as the ideal country for experimentation for new solutions in an era of transformation. I agree.
We had the first revolution after the financial troubles in 2008. Due to a lack of transparency, corruption and nepotism, Iceland had the third largest financial meltdown in human history, and it shook us profoundly. The Icelandic people realized that everything we had put our trust in had failed us. One of the demands during the protests that followed - and that resulted in getting rid of the government, the central bank manager and the head of the financial authority - was that we would get to rewrite our constitution. “We” meaning the 99%, not the politicians who had failed us. Another demand was that we should have real democratic tools, such as being able to call directly for a national referendum and dissolve parliament.
The result Krugman explained, was that Iceland managed to “limit the rise in unemployment and the suffering of the most vulnerable,” and survived with its social contract intact, because it let the banks go bust and bailed out its citizens. How are Latvia and Ireland “successful” compared to this? It depends on how you define success. As I wrote last summer, every time I hear Ireland’s austerity called “successful” I’m reminded of when George W. Bush called the Iraq war a “catastrophic success.”
The current economic crisis may be a result of conservative failure, with catastrophic results that have impacted most Americans in one way or another. But I think there’s a better way to describe it, by borrowing phrases from a former president and best-selling author: What’s happening in Ireland and here in America is really a “catastrophic success” for something called “Disaster Capitalism.”
... Catastrophic success isn’t necessarily concerned with executing a planned destruction of a system. It can refer to the successful exploitation of a crisis or catastrophic event -- engineered or otherwise -- to achieve a particular end. The destruction may be engineered, but it may just as easily be the result other actions or conditions, and even natural disasters.
Catastrophic success is, in a sense, what happens when the total failure of a system in which total and irrecoverable loss occurs, is the desired goal. That pretty clearly defines what’s happening in Ireland right now -- the total collapse of an economic system, in which many Irish citizens are experiencing total and irrecoverable loss. That pretty clearly defines where we’re headed if our political leaders don’t act to reverse current trends.
Total destruction of a system, including the people’s level of trust in the system, is a success if the destruction is exploited to achieve desired end -- in this case, a restructuring of the economy to the disadvantage of the working- and middle-classes, widening economic disparities and further concentrating wealth into the hands of a narrow few. The result is precisely the “ruthlessly divided world” Klein describes, with its “unapologetic partition between the included and the excluded, the protected and the damned.”
“Success” for Austerity measures like those enforced in Ireland, and those conservatives want to inflict on Americans, isn’t measured the way we might think. Austerity’s “success” isn’t measured by how much it grows the economy or lowers unemployment, or how much relief it offers to middle- and working-class families.
Austerity isn’t supposed to work for the middle- and working-class. Austerity isn’t supposed to work for the 99%. Austerity, if it works as the people who designed it intend, is supposed to fail the 99%. It’s “success” is measured by that failure.
The current fad is to declare that austerity, in the form of slashed budgets, slashed jobs, a slashed tax based and so on will magically produce the opposite of all those things, as wealthy benefactors rush in to spend all the new money you have given them, create jobs creating new products nobody can afford to buy, and, I don’t know, start rebuilding infrastructure out of the goodness of their hearts. It is never clear, and nor is it honest: it is predicated on the danger of the Scary Deficit Monster, who was not at all scary during the time he was being fed by these same politicians and think-tank prophets, but who, like any false god, just happens to hate all the same things that his worshippers do.
In this case, the Scary Deficit Monster hates helping unemployed people, hates regulations (regardless of whether or not they save money), hates government in every form save the military, and especially hates it when well-off citizens are asked to pay the same rates they did a few decades ago, back during the dark, nearly apocalyptic 1980s or 1990s. That is damn nuanced policy for a mindless, frothing Deficit Monster, but it is consistent: the Deficit Monster hates anything Democrats might want and just happens to love all the ideas of the Heritage Foundation, etc., etc. And why not? Even a Deficit Monster ought to love its mother.
By that measure, Ireland is a success, and Iceland is a failure. As for the U.S., if the jury is still out, it’s because of global movements that are determined to resist austerity’s catastrophic success.
On the streets of Moscow in the tens of thousands, the protesters chanted: "We exist!" Taking into account the comments of statesmen, scientists, politicians, military officials, bankers, artists, all the important and attended to figures on this planet, nothing caught the year more strikingly than those two words shouted by massed Russian demonstrators.
... And who could blame them for shouting it? Or for the wonder? How miraculous it was. Yet another country long immersed in a kind of popular silence suddenly finds voice, and the demonstrators promptly declare themselves not about to leave the stage when the day — and the demonstration — ends. Who guessed beforehand that perhaps 50,000 Muscovites would turn out to protest a rigged electoral process in a suddenly restive country, along with crowds in St. Petersburg, Tomsk, and elsewhere from the south to Siberia?
In Tahrir Square in Cairo, they swore: "This time we're here to stay!" Everywhere this year, it seemed that they — "we" — were here to stay. In New York City, when forced out of Zuccotti Park by the police, protesters returned carrying signs that said, "You cannot evict an idea whose time has come."
And so it seems, globally speaking. Tunis, Cairo, Madrid, Madison, New York, Santiago, Homs. So many cities, towns, places. London, Sana'a, Athens, Oakland, Berlin, Rabat, Boston, Vancouver… it could take your breath away. And as for the places that aren't yet bubbling — Japan, China, and elsewhere — watch out in 2012 because, let's face it, "we exist."
Everywhere, the "we" couldn't be broader, often remarkably, even strategically, ill defined: 99% of humanity containing so many potentially conflicting strains of thought and being: liberals and fundamentalists, left-wing radicals and right-wing nationalists, the middle class and the dismally poor, pensioners and high-school students. But the "we" couldn't be more real.
This "we" is something that hasn't been seen on this planet for a long time, and perhaps never quite so globally. And here's what should take your breath away, and that of the other 1%, too: "we" were never supposed to exist. Everyone, even we, counted us out.
Austerity’s “catastrophic success” can still be turned round, as long as there’s still a “we” to speak of.