Make Boston or Berlin an election issue

Both Pat Rabbitte's remarks on work permits and the coverage of the emerging pension "crisis" in the Irish Independent throw up issues that could allow quite distinct ideological positions to emerge in the run up to the next election.   When Mary Harney made her famous "Boston or Berlin" speech to the American Bar Association in July 2000 her ostensible target was a more centralised, federal Europe.  She was keen to stress her commitment to tax cutting, pro-enterprise policies and to emulate the American model of individualism and the free market.  Nearly six years later the same choices are being presented to us. 

In his Irish Times interview, the Labour leader said that unless basic standards for workers were established across the EU, Irish jobs would be threatened.  This is a core issue about defending the living standards of workers.  Rabbitte wants to reexamine the way the Irish state issues work permits but he knows that the issue cannot be tackled at the level of the nation state.  Rabbitte gives examples of labour replacement in many sectors and successfully rebuts the notion that this outsourcing is something that is confined to the maritime sector.

The pensions issue is a bit different in the sense that, largely because of our fortunate demographic position, the crisis is some way off.  But the articles in today's Indo give us a preview of the shape of the battles ahead.  The headline "Battle over pensions on way as firms reduce costs" frames the story as one of private sector companies being forced to reduce the spiralling cost of its pension schemes.  An op-ed piece inside the paper blames the situation on "our longer lifespan".  In the editorial, the writer takes a swipe at the public sector in general and benchmarking in particular as being specifically Irish factors.  The general impression conveyed is that there's not much that can be done.  A problem exists and must be addressed.  But in a technocratic way and not in a way that will present the bigger picture and possible political choices to be made.

The Boston or Berlin dichotomy may be a little crude but it has the virtue of addressing the issue of how we want to live - as individuals, embedded in a set of familial and social relations.  Is it inevitable that we will work until well into our seventies?  Do the imperatives of global competition mean that Europeans must get rid of all manner of labour market rigidities (i.e the welfare state as we know it) in order to achieve US levels of labour productivity growth? 

A conservative American commentator writing in the Claremont Review of Books observes

that average U.S. per capita income is now about 55% higher than the average of the European Union's core 15 countries (it expanded to 25 in 2004). In fact, the biggest E.U. countries have per capita incomes comparable to America's poorest states. A recent study by two Swedish economists found that if the United Kingdom, France, or Italy suddenly were admitted to the American union, any one of them would rank as the 5th poorest of the 50 states, ahead only of West Virginia, Arkansas, Mississippi, and Montana. Ireland, the second richest E.U. country, would be the 13th poorest state; Sweden the 6th poorest. The study found that 40% of all Swedish households would classify as low-income by American standards.

I won't quibble with the raw statistics but undoubtedly more appropriate measures of living standards  and well being would not yield those sorts of comparisons.  From a robust US conservative point of view, European states are "coddled" by protectionism, welfarism and all manner of tax funded public subsidies that reach deep into the prosperous classes.  Europeans cannot be complacent about the long term viability of their social market system and some trimming is probably needed.  We can take a look at the concept of "flexicurity".  In Ireland the leader of the Labour Party can say in the same interview that he does not want to raise corporation tax as it's essential for Irish economic policy in a global context but he nevertheless  is in favour of imposing a minimum tax on the super-rich.  When it comes to renegotiating social partnership it is important for trade unions to mount a robust defence of an essentially European mode of economy and welfare.  IBEC and other employer groups certainly aren't shy about pursuing their Americanising agenda. 

Comments

[the saint]

Very interesting piece about income . Is that before or after tax?

[J McConnell]

> undoubtedly more appropriate measures of living standards and well being would not yield those sorts of comparisons.

As someone who has lived in the US for many years and spent extended periods of time back in Europe (Ireland, UK , France) over the last few years I would have to say that the difference in the standard of living between the US and the EU are even greater than the Swedish study indicate.

When I do the numbers for myself, someone at the high end of the high-tech pay-scale, my net disposable income would drop almost 60% if I moved to Ireland, a bit less for the UK, and a lot more for France and Italy. The lower salaries and much higher tax are a major factor but the biggest single difference is the much higher cost for the necessities of life, housing, food, car, etc. Plus all the things you take for granted in the US that are quite simply unaffordable or unobtainable in Europe.

The only people who seem to be paid more in Europe than in the US are civil servants.

As for quality of life - its no contest. Its a lot more pleasant to earn ones living and live ones life in the US than anywhere I know in Europe.

Dublin in particular is a pretty nasty place to live and work.

[pampooties]

An election issue? In the present climate of an impending SSIA windfall in the lead up to a general election, and continued white-washing of the true state of the economy, I doubt that Berlin will stand much of a chance. I have not read Rabbitte's rebuttal of the idea of outsourcing being simply a maritime phenomenon, but as recent comments from economists discussing last year's income tax takes show there is a school of opinion that while we may have more jobs, the quality of that employment is lower. My first hand experience tells me that that "qaulity" of employment that is being lost is the very thing you hint at- pensions, health care, union representation and other benefits that the civil service and some indigenous manufacturing companies took for granted for a long time. Many more of us are "outsourced" via foreign companies that specialise in that sort of thing. In short the very things which protected the Irish worker are now virtually gone from the private sector. Is it impossible to have those kind of benefits and remain competitive as an economy? Possibly. However, all things that rise, will eventually fall. When this economic cycle in Ireland is over what will we be left with? Little by the way of manufacturing jobs, mortgages up to our ears, no pensions. Oh, and we will all be living in Arklow and Kinnegad. Those of us who aren't now, probably never will be as the gap increases between rich and poor.
Until then however, as they government would like us all to believe, we've never had it so good.