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Statement: Bankers bailed out! Workers sold out!

21 February 2009

Leaflet distributed at the anti-pension levy demonstration in Dublin. 

Workers have come here today in their tens of thousands to protest a levy that will cripple working people and their families.

The levy will bail out the bankers and politicians who caused the problem while the innocent pay. We have to say no and we have to fight back.

A first step lies in recognising that the leaders on the plat-form, the leadership of ICTU who organised this demonstration, have sold us out. They didn’t accept the levy, but the whole purpose of the partnership talks was to find a mechanism through which workers would pay the billions needed for the bail out. Now they propose a social solidarity — that is that we stand together with the bosses who are trying to shaft us!

This is a class struggle for survival. The workers must build there own rank and file organisations in every corner of the country and develop their own solution to the crisis that protects the vast mass of the population while squeezing the crooks who caused this mess!

Why are we in this crisis?

The trigger has been massive speculation in property resulting in unsustainable price increases that could not be maintained. Prices had to stop increasing and when they did many speculators were left with property they could not afford but could not afford to sell. Massive oversupply led to falling prices and the huge amounts of money lent to property developers by banks are now bad debts, many of which will never be repaid. This in turn has led to a banking crisis and a crisis in State finances, which became overly dependent on taxes on property sales. This however has only been the trigger to the disas-trous economic collapse which is now taking place.

In order to create and sustain the Celtic Tiger it was necessary to generate massive amounts of credit leading to a huge increase in debt. The massive expansion of credit for property speculation is really only one example of this. This increase in debt was necessary because wages everywhere have been held back, with the pay freeze under the latest partnership deal only one example. The share of national income going to wages has fallen from 71.2 to 54 per cent between the periods 1980-1990 and 2001-2007.

Repeatedly we have been told that wages have to be kept lower to remain competitive, but every worker across the world has been told the same story. Thousands of jobs in the Dell factory in Limerick are going but no possible amount of wage cuts could make Irish workers ‘competitive’ with Chinese workers paid a pittance. An Ipod can be produced for $4 in China and sold for $290 in the West. Intel is even moving production from the Chinese coast to inland China because it is cheaper there! Some Chinese workers cannot even compete with other Chinese workers! This is a race to the bottom we cannot win and we should not accept.

But how are all the new consumer goods to be purchased when wages are being held back and profits are exploding? The answer is to get all of us to take up more credit and get into deeper and deeper debt. Debt in the Irish State has exploded from €504 billion in 2002 to €1,671 billion at the end of last year. We now have a bigger net debt than Japan! When this credit is created the bankers levy commissions and charges so that our incomes are squeezed a second time to boost the profits of the bankers and other financial parasites. This enormous creation of debt could not continue however without creation of real incomes and wealth to pay it all back and the bursting of the housing bubble has exposed the whole finance system as a house of cards.

What other system would build 350,000 houses that lie empty, while prices inflate at unsustainable levels and people in need of housing go without; and performs these feats while bringing the whole economy crashing down as a result. What other system could take our pension contributions for years and now say there is nothing there, as is the case with Waterford Glass.

This situation could only come about because of an economic system based on the pursuit of the highest profit irrespective of the social consequences. Only a capitalist system could do this. A system that rewards greed and ignores social need. A system which awards fat cat bonuses to bankers who create no wealth themselves, and admit they don’t even understand how their organisations work, while condemning as unproductive those like teachers and public servants who provide essential services.

The ultimate cause of this economic mess is because we live in a capitalist society.

Can the Government’s solutions work?

The first thing to understand is that this incompetent Government doesn’t have a solution. It promised financial stability after its bank guarantee scheme pledged over €400 billion to the banks that it didn’t have. It lied and said it wasn’t a bail out. Then it promised three banks €5.5 billion if they could also raise some of their own money. When they couldn’t they nationalised Anglo-Irish and gave €7 billion of to Bank of Ireland and Allied Irish. They gave our pension money to institutions that no capitalist in the world was prepared to invest in. The Government has admitted that it hasn’t carried out a ‘due diligence’ test – in other words it doesn’t know how bad the banks are it is putting our money into! We are now expected to pay for all this through pay cuts, service cuts and increased taxation.

It won’t work. Lower wages will mean bigger profits and lower costs for the State but it will reduce demand in the economy and intensify the vicious spiral of falling production, unemployment, lower wages, lower demand and lower production. On the other hand maintaining wages will result in lower profits, lower investment, higher costs for the State resulting in higher borrowing and higher interest costs on the State debt. This shows the irrationality of the system we live in – neither higher nor lower wages will provide a solution because wages are not the problem – haven’t we just had a pay freeze when this whole crisis erupted? How could it be our fault?

We are also blamed for the financial crisis? But most of us don’t even understand how the stupidly complicated financial system works never mind have had the least bit of control over it.

Our alternative starts with practical proposals to ensure we successfully resist the attacks on our living standards. We need a workers campaign that unites all of us in the private and public sectors. We should reject partnership with those responsible for the crisis. Our campaign should be organised, built and controlled by ordinary workers and not by leaders who are more interested in walking the corridors of power with the rich and those in authority. We need to organise a nationwide campaign which calls not just to ‘change’ the levy but scrap it. This campaign should demand a general strike of all unions on the same day with the same clear and unambiguous message.

Our alternative then is not one we call on the Government to implement. It is not one we can rely on opposition parties to adopt and then hope that they get into office sometime in the future. It is not one we can leave to union leaders wedded to partnership with those supporting and implementing the levy. It will become practical when we are strong enough to impose it. It is therefore one we must create ourselves, organise ourselves and struggle for ourselves. It is one that goes beyond simple trade unionism and is political. It is a socialist alternative and it is one we need a new party to fight for. We need a new workers’ party to struggle for our interests and fight for our sort of society. The current crisis is the greatest argument and demonstration of its necessity.

Saving the Banks

The Government is trying to sub-stitute State credit for the collapse of private credit by offering guarantees and recapitalisation to the banks. They have given €7 billion to two banks and will have to pay for the bad debts of Anglo-Irish. These are owed by the property developers who will simply go bust, write off their debts which we will now pay for and set up new companies to continue their speculating ways. That’s what Brian Cowen means when he says that at Anglo-Irish it will be ‘business as usual.’

Again this won’t work. The Government cannot replace all the mountain of credit that is now collapsing, as we saw above it was €1,671 billion at the end of last year - the Government’s €7 billion is chickenfeed. Of course not all of this debt needs to be paid back right away but a lot of it does and we are being asked to pay for it whether we took it out or not, and will be asked to pay for it for years into the future.

The Government have lied and lied about its policy – pretending that they weren’t involved in a bank bail out and we are all in this together. But we are not all in this together. The Government promised billions it didn’t have in the guarantee scheme to protect the banks. It promised nothing for workers falling into arrears on their mortgage. It gave tax cuts to multinationals and property developers in the last budget but tax increases for us. It has taken our money in a phoney pension levy and given it straight to the bankers. It has said these bankers will use it to lend to business to get the economy going again. This is just another lie.

The money will not go to small businesses or the self employed. It will not stop house repossessions. It will be used to write off bad debts to the speculators and property developers and to protect these parasites as much as possible. The money will be used to protect the banks first and last if only because the banks will not be able to protect themselves and continue lending. The Government knows this and the banks know it.   Our money is simply being used to protect the bankers and speculators.

There is no question of us all being in this together or sharing the sacrifice equally because the sacrifices we are being called on to make are to save the system and save those who own and run the system. This is a crisis of the whole economy and because it is capitalist we are being asked to save the capitalists. It doesn’t matter what their crimes have been.

This is why it isn’t just a question of Fianna Fail incompetence or their cosy relations with the property speculators. The Greens are in Government and have no alternative. Fine Gael has no alternative except quicker and more precise cuts in our living standards. The Labour Party has criticised the ‘pension’ levy but it also has no alternative to cuts in our living standards. The Labour Party also wants to save the banks and also wants to save the current economic system. It opposes us taking militant action to defend ourselves.

Building the alternative

Yes - there is an alternative and it starts with us declaring that workers are not responsible for the mess and we will not pay for it - any of it.

1. We reject the ‘pension’ levy which is just a wage cut under another name. We do not want to fund the banks and we do not want to pay for big bankers salaries or bail out their rotten institutions. We will not accept any token sacrifices by the bankers or the rich to get us to pay for the crisis that they and their system created.

2. We will not therefore accept any new social partnership talks on this levy because their only outcome will be the same cuts with some fig leaf of measures aimed at the better off that will do nothing to protect us. In fact they will be used to justify more cuts in the not too distant future. Our union leaders are wrong to accept that we have a price to pay for the failures of this rotten system and its equally rotten bankers, speculators and politicians.

ICTU proposes a social solidarity pact but we are in solidarity with each other – not with the bankers, not with the speculators and not with the incompetent and lying politicians. They want the existing partnership deal respected and suggest that our ‘partners’ can use the ‘inability to pay’ clause. But what use is that to us?

3. We do not accept the division of workers into public and private sector with different or competing interests. The attacks on private sector workers, on their jobs and wages, have been used as an excuse to attack public sector workers. Now the lowering of public sector wages will be used to justify more attacks on private sector workers. We will not tolerate attempts to blame migrant workers for this crisis or make them pay. We stand for workers unity against the Bosses and their State who have united against us.

4. We oppose the bank guarantee – it should be repudiated. We are opposed to our pension money being used to bail out banks that no one else will invest in and is designed to protect big shareholders as much as possible. We are against this nationalisation of Anglo-Irish. Nationalisation is not socialism as has always been wrongly argued by nearly all commentators who reject socialism but display complete ignorance of what it is. Nationalisation is no more socialist than the prisons or police are socialist institutions just because they are owned by the State. This nationalisation is to protect the banks and those property developers who owe them money. If Anglo was saved it would be handed right back to the private sector after taxpayers had paid for it. Only when we democratically run the State, not just vote every few years, will state owner-ship in itself be progressive.

This State is not our State. In the last few months it has shown that it exists solely to defend the banks, the property speculators, multinationals and big business. It is estimated that in 2004 total subsidies to big business and the rich totalled €8.4 billion yet the latest budget increased tax cuts for these people while we have seen our wages and services cut. The State is no more ours than the banks are our banks. We take no responsibility for the crisis in State finances. We already pay enough taxes. The shortfall is due solely to low corporate taxes and handouts to big business and multinationals.

5. We are in favour of workers taking control of the banks and revealing the true extent of their corruption and bad loan book. Instead of a recovery plan with those who created the mess the workers’ movement should put forward its own plan to protect our jobs and wages. We should make the money retained by the banks available to fund the real development of our society and not the property speculation that has led them to ruin.

We should demand that the State recognise our control and facilitate our plan. We should ensure the banks can play a role in defending all our jobs and living standards by securing the money of small depositors; rejecting the ownership claims of big shareholders and bond holders and calling in the debts of the speculators and property developers. We should take control of their assets if they cannot or refuse to pay their loans. Funds can then be provided to support real wealth creation such as Waterford Glass, not building empty houses and office blocks.

This is the only way those responsible for this mess can be made to pay for it. Taxation on the rich and on big business should be increased and their assets seized where they attempt to frustrate the democratic wishes of the population.

6. All workers should campaign against and physically prevent repossession of homes from those who fall into arrears because of unemployment or pay cuts. We should campaign for and support occupations of any employer creating redundancies. The example of workers in Waterford Glass should be supported. The State should be forced to ensure that all its resources, which are normally used to support multinationals, and the expertise of public sector workers are deployed to support continued production. Vital skills and productive resources should not be wasted while billions are poured into useless attempts to save insolvent banks.

7. This is not just an Irish crisis but an international one. Of course it is worse here than in many other countries because our leaders are even more venal than others but we can only have an alternative if it is an international one. Just as the current system is based on workers around the world competing with each other so our alternative is based on workers cooperating with each other. Our solidarity should not be with our bosses or politicians but should be with British, European and workers from around the world. Their support can allow us to defend ourselves against the claims of big business and multinationals across the world. The national strike in France and the demonstrations in Greece show that this international solidarity can be created.

8. This crisis is so big it is clearly a political one. When this happens we are called upon to make sacrifices for the ‘national interest’. But this is another Government lie. We are expected to put billions into protecting shareholders of banks and owners of State bonds, many of whom are foreign speculators, yet we are asked not to shop in that part of Ireland north of Dundalk. We are called upon to stand up for ‘middle Ireland’ when the sacrifices we are asked to make are to bail out the very richest in our society, many of whom are so Irish they are tax exiles. For this Government and its supporters the national interest is the interest of the bankers and speculators. This is not our national interest.

9. Our alternative is a workers alter-native. It is the very opposite of the Framework agreed by the trade union leaders. Just like the leaders of the political parties they do not in principle oppose the pension levy or the cuts. They simply want them spread more widely. But as we have said – we did not create this crisis and we will not make sacrifices to protect those who did. We should have no doubt: the pension levy and the other cuts are only the start. The Government has prom-ised even more cuts in future. Once we accept the principle of cuts we weaken our ability to resist them.

A workers’ alternative is one that puts our interests before that of the bankers and speculators. They should be made to pay and we should fight for a new economic model that defends the interests of the vast majority. This socialist model means that society is run by those who work in it. The banks should be run by bank workers and the health service by health workers. This way our society will be run in the interests of the majority and not for the private profit of a few. 


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