Monday, November 29, 2010

How the ECB wages class war

Dublin’s Kilmainham Jail is not somewhere you can easily forget. Even though I only recall visiting it twice, I have had a morbid fascination with this cold, dark place for most of my life. More particularly, I am obsessed with its Stonebreaker’s Yard, where the leaders of the 1916 Easter Rising against British rule were executed; James Connolly, a socialist visionary who demanded that all children be cherished equally, was so badly injured that he was carried before the firing squad on a stretcher.

When the centenary of the rising occurs in 2016, any celebrations by official Ireland will be a sham. Far from being independent, Ireland’s destiny is now in the hands of a foreign cabal which is callously indifferent to how the children Connolly wished to cherish are reduced to begging on the streets. (Merchants Quay Ireland, a charity, reported a 17% increase in the number of people using its homelessness services in the first six months of this year, compared to the same period in 2009).

One of the most disgusting things I read last week was a presentation given by Jean-Claude Trichet, head of the European Central Bank, to MEPs. Trichet had the gall to boast of the “achievements” made by his institution over the past 12 years at a time when he was forcing misery on Ireland.

It has become clear that Trichet strong-armed the Dublin government into “requesting” a bail-out from the European Union and the International Monetary Fund. Under its terms, Ireland’s budgets will be determined not by the needs of the Irish people but by the diktats of the ECB and IMF. The new rulers of my country are an unelected and unaccountable elite who use language to obfuscate, rather than illuminate.

Has Trichet spouted so much technocratic gobbledygook that he can no longer speak plainly? What kind of guy can praise cutbacks that will leave the poor even poorer as “confidence-inspiring policies”? Where is the morality in a man who warns that there will be a “lost decade” in Europe unless austerity becomes the norm? Is he happy that there will be a lost generation of unemployed people because of the medicine he has prescribed for millions?

And, of course, this enforced hardship is in no way confined to Ireland. Last week the ECB, IMF and European Commission also concluded a second “review mission” to Greece. It decided that in order to qualify for a €80 billion loan from the euro-zone and a further €30 billion from the IMF, Greece would have to spend less on health. You can be sure that the “missionaries” didn’t trek around inspecting cancer facilities in Thessaloniki before declaring health expenditure in Greece as “inefficient”. As it happens, Greece spends about €225 less per head of population on healthcare each year than the €2,300 average for members of the Organisation for Economic Cooperation and Development. But I doubt that the missionaries worried about the human consequences of applying the cut-throat logic of profit and loss to professions traditionally dedicated to caring and public service.

We journalists are gullible. One falsehood that we have swallowed is that French political figures have an aversion to the unbridled capitalism favoured in the US. This myth becomes untenable when one realises that Frenchmen are in charge of three of the most powerful economic groupings in the world: Trichet in the ECB, Pascal Lamy in the World Trade Organisation and Dominique Strauss-Kahn in the IMF. This inglorious triumvirate are as wedded to the Washington Consensus – that toxic doctrine under which deregulation and market liberalisation should be pursued no matter what the social costs – as any American. In the case of Trichet, he is even more zealous in defending neo-liberal orthodoxy than his nearest US counterpart. Whereas Ben Bernanke, the Republican who heads the Federal Reserve, is injecting $600 billion into the US economy as part of a second round of “quantitative easing” – and has emphasised that the money should be used for fiscal stimulus purposes – Trichet is parroting Margaret Thathcher’s line that “there is no alternative” to punishing the masses for a crime they never committed.

A second falsehood is that the ECB’s economists are simply giving technical advice. In truth, they are class warriors, intent on widening inequality. Indoctrinated in the Ecole nationale d’administration, Trichet hails from a highly privileged milieu. Though ostensibly established by Charles de Gaulle to “democratise” access to the civil service, the ENA serves the same purpose as Oxford and Cambridge in Britain. With few exceptions, its champagne-sipping alumni think they have an innate entitlement to shape the policies that everyone else must live with.

Next year Trichet’s term as ECB head will expire. The frontrunner in the race to success him is Axel Weber, president of the Bundesbank in Germany, although Weber may have damaged his chances by speaking out against the ECB’s decision to buy up government bonds in May.

Regardless of who leads it, the ECB will continue to lack democratic legitimacy. Almost unique among central banks, it is independent of political control and is under no obligation to address what effects its prescriptions may have on employment or poverty. The ECB does not serve Europe’s citizens; it takes decisions solely with the interests of the corporate class in mind. Maybe that explains why it is so contemptuous of the little people in our societies.

·First published by New Europe (, 28 November – 4 December 2010

No comments:

Post a Comment