Divide and Conquer - the Shock Doctrine in Ireland

As you can imagine, living in a tiny apartment in a foreign country with no access to a television, internet or even a radio can lead to intense boredom. It was during one of these bouts of boredom that I decided to go for a stroll through Paris, not really aware of where I would end up. I found myself next to the Notre Dame and remembered that there is a famous English language book-shop right across the river – Shakespeare & Company. It is a favoured haunt for novelists throughout the world, who head there with the promise of free accommodation and meals, in return for their artistic output. Being somewhat of an idealist, I appreciated the efforts of this romantic purveyor of charity and fully intended on supporting this establishment by buying a book.

It turned out better than expected – there was a book reading from a renowned travel writer, as well as some wine-tasting after. How so very French! Determined to keep my promise, I bought a book that had been previously recommended to me by a friend – The Shock Doctrine by Naomi Klein, the author of a previous bestsellet No Logo. I'm sure a lot of you have read The Shock Doctrine, and will have your own opinions on the book (no doubt depending on what political spectrum you hail from) but what I would like to outline is its relevance in Ireland today, and the adherence by some sections of the Irish media and political establishment to implement 'shock therapy' to our beleaugured economy.

I will start with some criticism of Klein and her book – her comparison of actual physical torture to the sort of economic 'shock therapy' of Milton Friedman and his extreme free-market disciples is extremely tenuous and brings down the tone of the book to the point that extreme free market supporters are painted as a kind of bogey men. It is outlined later in the book that economic 'shock therapy' can indeed engendar and rely upon violence, as shown by the hideous regime of Pinochet in Chile, so the linking of torture to this economic ideal is not needed, in my opinion. However, Klein's outlining of how a rapid crash course in deregulation, privatisation and savage cuts in public spending can destroy a society has extraordinary resonance with the current decimated state of the Irish economy.

Klein recounts the stories of many countries – particularly in South America – during the 60's and 70's, that were savaged by economic crises such as high unemployment or hyperinflation, many caused by external sources such as interest rate hikes and trade embargoes. This allowed a certain type of dictator to take advantage of these crises and launch successful coup d'etats (supported and abetted by the CIA, determined to rid Latin America of 'Socialism'). These dictators were inspired by the extreme free-market views of the Chicago School of Economics and particularly Milton Friedman's ideas – indeed Friedman acted as an advisor to Pinochet in Chile. Friedman viewed these countries as a kind of experimental lab, where he could test his theories and mathematical models – the resulting breath-taking hike in inequality and decline in standard of living of most workers would imply that this 'shock tactic' theory should have stayed just that – a theory. However, in the 80's various events occurred which proved that the 'shock theory' may take hold in Western democracies, given enough of a crisis – as occurred in Britain after the Falklands war and Thatcher's privatisation spree, and later in the US after 9/11 with Bush's privatisation of the military and even social security.

But war is not the only kind of crisis which can provoke serious national instability – economic crises are just as serious. Whereas after the Great Depression, there was a worldwide consensus that redistributive policies like the New Deal would be the solution, in the last three decades we have seen a swing in the other direction. When Poland finally won independance from the shackles of Moscow, it sold off most of its State assets for lucrative deals with the elites, while the Government cut the wages of the standard worker. Organisations such as the IMF have forced countries to not renague on the free market policies which got them into the crisis in the first place, but to instead plunge further into that model – privatise more, deregulate more, and purgethe public service to its very bones. In Friedman's own words – ''Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that we take depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.''

This finally leads me to Ireland's current situation – it seems that we are fucked. As crude as that statement is, it is nowhere near as crude as the Government's handling of the Depression in our country. In 2008, all that time ago, Fianna Fail indeed denied that we were in recession – maybe they knew that because they have been in power for so long that they have noone else to blame (of course after the Wall Street crash we were told it was all Lehman Brothers' fault). Then we were told that there would be a soft-landing. Then we were told that there would have to be a minor adjustment, and were sold the magical solution of the banking guarantee (in fact Sinn Fein, for all their posturing these days comparing Labour to FF and FG, voted in favour of this act of economic stupidity - dare I say treason)

Nearly 15,000,000,000 euro has now been cut from the economy in the last 4 budgets – a huge figure (I won't remind you of Lenihans claim last Christmas that we had 'turned the corner'). Even more savage cuts have become apparantly, in the words of Friedman, 'politically inevitable'. And what has this slashing of public expenditure actually achieved? Absolutely nothing – in fact, it has further deflated our economy. Unemployment has inevitably sky-rocketed from a lack of investment, emigration has surged (unemployment would be half a million people without it) and our bond yields are increasing hour by hour. This is despite last weeks clarification that the adjustment this year will be 6,000,000,000 with the vast majority of that in cuts. As the cliché says, the definition of insanity is doing the same thing over and over, and expecting a different outcome.

Why are our bond yields increasing at such a rate (over 8 points this week, within spitting distance of junk status) ? It is because investors know that a country needs to have a capacity to actually grow and pay back its debt – cutting everything just doesn't work. Obama has been lambasted for investing in a stimulus package in the US, but this has reduced unemployment significantly, as has been the case for other countries in Europe. Why is our Government so afraid of seeing the obvious benefits of stimulus packages and the multiplier affect? I believe it is due to the belief of many individuals in the media, Government, the Department of Finance and Brussels in the 'shock theory' school of economics. They ignore the real causes of this crisis – massive deregulation under Charlie McCreevy, poor governance, low taxes and huge dependance on construction, etc and instead, favour exactly the same medecine. How do we lower the defecit ? Why of course, we have to privatise all productive State companies (recently outlined by Fine Gael in their policy document), we should keep taxes at their unrealistically low level, and we should lay off a sizable portion of the public service.

But why would people like Sir Anthony O' Reilly, Micheal O' Leary or Dennis O' Brien want a more fair distribution of the pain in the Budget? As billionaires with an extensive influence in the media, they are able to manipulate opinion towards this 'shock doctrine' – keep the people divided, keep the private sector pitted against the public sector, students versus the middle class, pensioners versus the rest of society – it is a divide and conquer strategy. In my opinion it is more like a scorched earth policy. And while the vast majority of the media, and indeed society, ignore the real perpetrators of this crisis, these same people are able to espouse their shock and awe tactics to the public that had no hand in the making of it. Make no mistake, the likes of O' Reilly are rubbing their hands in glee at this 'opportunity' to implement their individualistic idealogy on this whole country. We get multi-millionaires like Peter Sutherland (Chairman of the secretive Bilderberg Group and head of RBS when it had to be bailed out by the British Government) saying that the dole should be hit significantly, and Mike Soden (disgraced ex-CEO of Bank of Ireland who was sacked for looking up porn in his office) saying that college fees should be re-introduced. It is time that every Irish person stands up and realise the true intentions of these people, and groups like the IMF. They have a lot of impressive mathematical equations but most of them come down to this:

Divided people = Increased Profit