What is happening to Fermanagh’s economy?

The Lough Erne Resort Site

The recent announcement that the Castlehume-based, Lough Erne 5-star Luxury Hotel and Golf-course was being forced into administration due to the unsustainable debts which the owners had built up represents the latest in a string of blows to the local economy. This comes on the back of the transfer of both Quinn Insurance and the Quinn Group Ltd out of the hands of the Quinn family – both of which are likely to herald large-scale redundancies as new owners seek to ‘restructure’ their holdings to optimise profit-levels.



Last year a survey identified that one quarter of all local businesses anticipated that they would lose staff in the next two years and a further one in every eight local businesses did not know whether they would survive the same period. Unemployment in Enniskillen has doubled over the past three years and in some peripheral villages (with higher dependency on the construction sector), the unemployment rate has trebled. The very viability of the current societal structure of this county is threatened as never before.

What is behind the collapse?

The collapse in Fermanagh reflects that of the economy of the Republic of Ireland. Very many local people found work on building sites in Cavan, Leitrim, Monaghan and Donegal – some even commuted to work in Dublin and even further afield. When the bubble in the property sector in the south collapsed, some sought to continue working in the building trade in Belfast and elsewhere in the east of Northern Ireland before the property sector collapsed up north as well.

To some extent, the boom was exacerbated by the low interest rates offered by the euro at a time when the economies of central Europe were stuttering and the ECB’s priorities were to get these big economies growing. But there was clearly competition between banks to expand their loan book by offering ever more generous terms of credit – terms which were clearly unsustainable in the medium-term – and this built up a huge liability. Of course, governments in both London and Dublin decided that the banks had to be saved and that the working class would have to pay the price of this enormous bailout by higher taxation and massive cuts to public expenditure.

In Fermanagh, this agenda – agreed upon by all Assembly parties – has meant an onslaught on future public expenditure budgets. Although the impact of these cuts has been covered up ahead of the Assembly elections of May this year, it is clear that they will further devastate local public services and further pressurise the local economy.

Market Failure

What is happening to our economy is what the neo-liberal economists would term market failure but the reality is that the logic of what is happening is inherent in capitalism itself.

Capitalism has the capacity to generate considerable growth and spur technological development. The reason it is capable of these outcomes (we are not discussing its negative features), is that it is based on the self-regulating market mechanism. The theory of this is that the market allocates investment to those sectors and segments of the economy where profit is maximised. The idea is that this results in a growth in supply in those sectors which optimising net growth in the economy. One consequence is that this reduces the overall level of profitability in that sector or segment of the economy and that eventually reduces investment as it flows to some other ‘high profit’ sector. The idea is that the economy self-regulates always channelling growth to those sectors which offer the most at any point in time. Now while socialists have made a devastating criticism of this mechanism – it still characterises capitalism and its operation is central to how the global economy works today.

In the case of Ireland, the financial markets are unhappy with the profits to be made here – they are higher elsewhere – so it pulls out demand from our economy and we suffer stagnation or in the specific case  of Fermanagh a massive collapse. The idea is that as workers are thrown into unemployment they will either move to places where growth is occurring e.g. Australia or Germany which will reduce the costs for their industry (and further increase profits in the short-term) or else they will stay on here and accept lower and lower pay for work (if they can find it).

The impact on public services has a similar effect. As the economy contracts, there is a fiscal deficit and this becomes an argument for privatising the remaining public assets and massively cutting back on the standards and costs of public sector provision. From the perspective of the financial markets, if they can effectively implement this, it will have the added bonus of further reducing public sector wages which will enable them to more effectively reduce those across the economy.

The unavoidable conclusion in terms of Fermanagh’s future is that our wages, which are already low by comparison to even those of Northern Ireland (75% according to the latest Labour Force Survey) must fall further. The surplus of our labour force (which is basically anyone currently unemployed and everyone leaving school over the next ten years) must leave the county – further depressing local economic demand and resulting in an even further contraction. Meanwhile, our local public services will be decimated with the agreement of all Assembly parties.

The Socialist Alternative

This economic context makes the case for a socialist alternative. We need to develop our economy on the basis of an alternative, publicly-owned (and not profit-driven) model. Only if we prevent the market mechanism’s imperative can Fermanagh sustain our people.

As a move towards this, we need to reverse all cuts to public services and instead invest in a large scale scheme of public works that will actually provide employment for people (and provide a stimulus to the local economy). To achieve this we need to build a social movement transcending the divisions of our society rooted in working class communities that will demand an end to the market dictatorship.

Socialist Party Launch in Enniskillen

I launched my campaign at an event attended by supporters in the Westville Hotel on Thursday 14^thApril. The event was chaired by Ciaran Mulholland, treasurer of the Socialist Party NI, and speaking was newly elected Dublin North Socialist Party TD, Clare Daly.

Clare spoke about the economic crisis in the Republic of Ireland and how ordinary people had suffered as a result of the decision to bailout bankers, speculators and bondholders. She pointed to the need for working people to campaign against these cuts and the need for social solidarity.

The following is a snippet from my speech at the event:

"There is already a threat hanging over services at the new hospital which hasn’t even been built yet; we lost obstetrics and gynaecology services for more than a month last year because they couldn’t find doctors to provide cover; half of our schools are under threat of closure and that was before the 15% cut to running costs and the 30% cut to capital budgets; classroom assistants are facing the axe leaving special needs children abandoned;  32,500 hours of home help has been slashed in Fermanagh this year alone; unemployment in Enniskillen has doubled in the last three years; our young people are having to emigrate, universities are becoming the preserve of the rich and we are threatened with even more public sector job losses. And all the mainstream political parties can do is focus on the need to reduce corporation at a cost of further job losses and public sector cuts!

"Our politicians are agreed on implementing the most severe cuts to public services since 1924; worse than anything Thatcher did. The parties are playing the same old divisive games ahead of these elections but once they are elected they will be joined at the hip implementing these cuts. Instead of implementing cuts, we need to build campaigns alongside the trade unions and communities to fight the cuts!

"They tell us that there is no alternative but it is estimated that the super rich get off with £120 billion in tax avoidance every year and they put £1 trillion into the banks in 2008 to bail them out. Yet there is not the money to employ much needed, newly qualified nurses in Northern Ireland and they have to emigrate to find work!

"The mainstream parties tell us that they have no choice that they must implement these cuts. But if our parties can only implement Westminster cuts, what is the point of the Stormont circus?

"If I am elected I will stand with every community to oppose these cuts and to demand a public works programme to create the jobs we need. We must build cross-community campaigns to stand for all public services so that they cannot implement austerity while playing one against the other as they have so many times before.



Canvassing Derrychara



"We are the only party who will be canvassing for votes in every estate in this town. Our campaign is already getting a good response. I believe we can achieve a great result in this election and I would ask you all to get involved in building opposition to these Tory-Stormont cuts!

The Socialist Alternative to the Cuts!

By Cllr Mick Barry, Cork

The capitalist media say that there is no alternative to the thrust of the economic policies being advanced by the government, the EU and the IMF.  This is completely untrue. There is an alternative - a socialist alternative. Here socialistparty.net puts it forward in the form of a ten-point programme.

 

Shut down Anglo Irish Bank

The bailout of Anglo Irish Bank is set to cost the taxpayer between €29.3 billion and €34.3 billion according to the Government and up to €40 billion according to some economists. The bank should be closed down immediately and the losses should be taken by bondholders, private banks who lent to Anglo and wealthy depositors.  The same applies to the Irish Nationwide Building Society.

 

Nationalise the banks under the democratic control of working people

AIB, Bank of Ireland and other banks should be nationalised.  The banks should be amalgamated into one state bank with jobs guaranteed and employment provided for Anglo and INBS staff.  The boards should be sacked.  A new board under the democratic control of working people should be established including elected representatives from the workplace and representatives elected from society as a whole.

End the bank bailouts which could end up costing as much as €90 billion -  redirect this investment to job creation and protecting social services.    Bondholders and private lenders from the banking world should be given no guarantee of repayment.  The bank should gear its resources and future profits towards reducing mortgages (all mortgages should be brought in line with current house valuations), defending jobs and providing cheap credit to small business and individuals.

 

For an emergency programme of socially useful public works

Under capitalism schools are unbuilt, communities are left without centres, health, sport and youth facilities and masses of homes are uninsulated at the same time as huge numbers of construction workers languish on the dole.  End this contradiction by launching a socially useful programme of public works to employ construction workers at trade union rates of pay.

 

For a 35 hour week without loss of pay

It makes no sense to have people working 39 hours a week plus overtime at the same time that 450,000 people are on the dole.  Cut the working week to 35 hours without loss in pay and share out the work among the unemployed.  This would create 165,000 jobs.  It costs an average of €20,000 per annum in dole payments and lost income tax revenue to keep a person unemployed for a year.  Measures which take a quarter of a million people off the dole could save the taxpayer up to €5 billion and this money should be used to finance the emergency programme of socially useful public works.

 

For a progressive tax system

33,000 Irish millionaires own €133 billion wealth.  The taxation system should be changed, not by bringing the lowest paid into the tax net, but by forcing this elite to pay their fair share.  A hefty wealth tax should be introduced; tax loopholes for the rich abolished and corporation tax significantly increased.  No to property tax on the family home and to water charges.

 

Abolish sky-high pay rates

The Taoiseach is paid €228,000 per annum. A government minister is paid €191,000 per annum. A Supreme Court judge is paid €257,872 per annum.  These sky-high wages and others should be abolished along with perks such as the ministerial car fleet.  This should be done, not to “set an example” to encourage ordinary people to accept austerity, but to strike a blow at a viciously unequal capitalist society.

 

Reverse the cuts

Not only are massive cutbacks an assault on the “social wage”, striking hardest at working people and the poor, they are also severely deflationary with the potential to cripple the economy as pointed out recently by the ESRI.   Every €1 billion in cuts is estimated to shave €500 million off economic growth for the following year.  Use the new tax revenues accruing from the introduction of a progressive tax system to stop the flow of cutbacks and reverse all the cuts of recent years.

 

No to privatisation

The author of the An Bord Snip Nua report, right-wing economist Colm McCarthy, has been put in charge of a review of state assets and this is, no doubt, a prelude to proposals for privatisation on a massive scale.  It makes no sense whatsoever to privatise when the private sector is responsible for the crisis in the first place. We need more nurses, teachers, doctors andsocial workers. Public sector employment should be increased not cut!

 

End the rule of the market

Capitalism has failed spectacularly - 450,000 on the dole, a banking disaster and €15 billion in cuts on the way.  If capitalism cannot afford to provide jobs, decent living standards, decent social services and a future then the working class cannot afford capitalism.  This system needs to be ended.  Nationalise the banks, the building industry and all the major companies which dominate the economy under the democratic control of working people and use their profits to meet the needs of the people.

 

For a socialist plan of production, in Ireland and internationally

Gear the economy towards meeting the needs of ordinary people not the superprofits of the capitalist elite.  Match unused resources with social need  -  e.g. finishing “ghost estates” to tackle massive social housing waiting lists.  Instead of bailing out banks use state funding and state industry to end unemployment.

End the rule of capitalism internationally and the power of unelected financial “markets” to bully millions of people, and entire countries.  For a socialist Europe instead of a capitalist European Union.  Instead of the anarchy of the market with its catastrophic rollercoaster of boom and slump, plan the world economy rationally to end poverty, starvation, mass unemployment and vicious social inequality.

Carried from http://socialistparty.net/theory/547-the-socialist-alternative