19 September 2008

Avast belay, yo ho, heave to, a-pirating we go

I have spent more than the odd moment or two these last few days thumbing through my (by now) well worn copy of Adam Smith's 'Invisible Hand', and have yet to find that passage that describes how the Invisible Hand that guides the market is in fact connected to an alcoholic cowboy from Texas. The nationalisation of a third major financial institution in the US in as many weeks prompts at least one Oscar Wilde reference (to nationalise one institution may be regarded as a misfortune; to nationalise three looks like carelessness) and reminds me again that America is a nation where language defines, not describes, reality.

Countless numbers of Republican politicians define their platform as one of small government, fiscal conservatism and little interference in the marketplace, and yet over the last seven years we have seen the Federal Government grow to its largest ever size and the budget deficit move from a surplus of $128 Billion in 2001 to a projected $162 Billion in 2007 and a (wait for it) projected deficit of $407 Billion for 2008. Hot on the heels of the taxpayer funded bail-out of Fannie Mae, Freddie Mac (up to $100 Billion each) and AIG ($85 Billion), comes the plan to buy hundreds of billions of dollars of sub-prime mortgage related bad debt from other financial institutions.

Basically the party of fiscal conservatism that created the laissez-faire conditions that allowed the sub-prime crises to occur, and rewarded the architects of these deals with massive tax-cuts and exemptions, now uses the money of those who do pay taxes to bail out those institutions that have destroyed the global economy. Those who have lost their homes are still homeless and destitute, but those responsible for the crises have been rewarded yet again.

While Ireland has not seen the same level of political support for the obscenely wealthy, such inequalities are still promoted by the financial system here. In 2006 Jury's Doyle Hotel group made €182 Million profit, and yet paid less than €2,000 in Corporate Tax that year, and nothing the year before. The average salary for a Jury's hotel worker in that period was €23,000, which would have resulted in a personal tax bill of €2,000 over the same two year period that Jury's paid €2,000 on their profits of €310 Million.

Over a five year period from 2002 to 2007 RyanAir paid €11.6 Million tax on profits of over €1.6 Billion, less than 1% when the official Irish Corporate Tax rate is between 10.5% and 12.5%, already one of the lowest in the world.

Ireland currently has the 2nd highest per capita income (GDP) in the EU, the 5th highest gross national income, and yet the government reported that 18% of the population was at risk of poverty. Statistics like GDP and GNI are heavily inflated by the wealth of the top 1%, and the substantial transfer of corporate profits offshore artificially masks the real levels of poverty in Ireland's national balance sheet.

The western political establishment exists to benefit the corporate class, at the expense of all others. Successive governments are elected time and time again by portraying themselves as the champions of the middle class and small businesses, when in truth the only people who have substantially benefited in either the US or Ireland over the last seven years have been the wealthiest 1%, who weren't doing too badly to begin with, and yet time and again the electorate believe the campaign slogans rather than looking at the historical realities. As George Orwell said "Political language is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind".

1776, the year America was born and Adam Smith published his "Wealth of Nations", was in the middle of the golden age of pirates. State-supported privateers preyed on global commerce, terrorized small nations, ignited wars in search of profit, press-ganged the weak and destitute into fighting against their will, and more than a few clung to anachronistic beliefs, arguing the world was flat in the face of all empirical evidence.

230 years later, progress means we now put our privateers in government.

Happy International Talk Like a Pirate Day!

'The Invisible Hand' - Adam Smith
Congressional Budget Office September 2008 report
'Measuring Ireland's Progress' 2007 report from the CSO
Talk Like a Pirate Day


At 5:35 pm, Blogger tpy said...

George Orwell said "Political language is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind".

I must disagree with the distinguished Mr. Orwell on the purity of the wind being cloaked.

At 5:42 pm, Blogger Unkie Dave said...

Aye lad, 'tis an ill wind that blows no tear gas away from the Xcel Energy Center.


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