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McCarthy Privatisation Plan – Labour Party Embraces Thatcherism

29/04/11

Colm McCarthyThe right-wing UCD economist Colm McCarthy, infamous for his 2009 report that proposed taking an axe to the public sector in the form of €5 billion of cuts, has published his latest report, which proposes the wholesale sell-off of public assets in the Twenty-Six Counties.

Despite the media spin that the report does not propose an ‘immediate fire sale’ of assets, McCarty is very clear about what the Dublin government should do: “We are recommending that there should be a planned programme of asset sales to reduce the state’s very high level of indebtedness.”

In effect, McCarthy is proposing a neoliberal solution to a problem caused by neoliberalism – the privatisation of valuable state assets which will further enhance the power of capital over labour. Those who caused the collapse of the economy will be offered the opportunity of a profit boon, with the added insult that any revenue accruing from the sale of companies such as the ESB, Bord Gáis, Bord na Móna, Dublin Bus and Coillte will be used to pay off the gambling debts of bankers and property speculators who caused the economic collapse.

The proposal to sell off state assets to clear private banking debt was agreed by the Fianna Fáil/Green Party government as part of their surrender agreement with the IMF last December. The so-called Memorandum of Understanding between the IMF and the Dublin government agreed that “any additional unplanned revenues must be allocated to debt reduction”. In other words, the IMF has demanded the sale of public assets in order to pump further public monies into the black hole of privately accumulated debt. With the Fine Gael/Labour Party coalition government slavishly committed to implementing the IMF plan, the outcome is clear.

For Labour Party ministers to claim that this is all part of a job creation programme is a cynical attempt to win public support for their Thatcherite privatisation plan and a betrayal of the tens of thousands of working people who voted for the party in the recent general election. After 14 years of Fianna Fáil government, many genuinely believed they were voting for change – what they have got instead is a rehashed Fianna Fáil/IMF programme of austerity.

Labour Party leader Éamon Gilmore recently published a book entitled Leading Lights, which is a series of essays on individuals, both public and private, who he suggested helped shape his politics. One of the public figures cited is Margaret Thatcher – Gilmore claims she was included to remind those on the left what they are against.

Éamon GilmoreThe politics that Gilmore claims to oppose is precisely what the Fine Gael/Labour coalition government has committed to implementing: driving down wages, slashing the public sector and privatising public assets are all key elements of neoliberalism. They are the essence of Thatcher’s politics and have been embraced with gusto by the Labour Party ministers in government.

From the mid-1980s, the Thatcher government in Britain engaged in a frenzied privatisation plan with the sell-off of companies such as British Airways, British Telecom, British Gas, British Steel and the British Airport Authority. Millions of public sector jobs were slashed – by the mid-1990s, the number of workers employed in the public sector in Britain had been slashed from seven million to five million. For Thatcher, the privatisation programme had the added advantage of weakening trade union strength in the public sector.

In Mexico, during the same period, rising interest rates and a fall in US demand for its products caused a severe economic crisis. The heavily indebted country was forced by the US and the IMF to implement an austerity programme and to privatise public assets in order to service debt repayments. From 1988, vast sections of the Mexican economy were sold to private investors, including banks, telecommunications, steel plants, sugar refineries and ports. Inevitably, workers suffered, pay rates in the newly privatised industries were slashed and, between 1988 and 1994, the number employed in the public sector was halved.

The privatisation programme created a profit boon for private investors. Carlos Slim, who, according to the 2011 Forbes Rich List, is the world’s wealthiest man with a personal fortune of US$74 billion [€50 billion; £44 billion], gained control of Mexico’s telecommunications system during the privatisation programme of the late 1980s. He has since built a vast telecommunications empire across Latin America. In a country where almost one in five lives in poverty, that one man could amass such a vast fortune while millions of Mexicans live in dire poverty is a shameful indictment of neoliberalism.

Previous experience of privatisation in the Twenty-Six Counties is little different. The decision to sell off Telecom Éireann in 1999 turned a profitable, publicly-owned and strategically important company into a plaything of international investors. The newly privatised Eircom was asset stripped, thousands of jobs were slashed and the company built up massive debt while failing to invest in telecommunications infrastructure.

Having passed through the hands of various corporate parasites, including Tony O’Reilly, early last year, the company was acquired by Singapore Technologies Telemedia for just €140 million [£124 million]. To put that figure into context, when shares in the company were first floated in 1995, a Dutch and Swedish consortium acquired 20 per cent of the company for €232.2 million [£197.4 million], which, at that time, was considered well below its actual value. The company currently has a crippling debt of €3.5 billion [£3.1 billion] and is seeking to shed a further 2,000 jobs.

Dublin BusCommercial state companies in the Twenty-Six Counties employ 40,000 workers and are of huge strategic importance to the development of the economy. As experience, both in the Twenty-Six Counties and elsewhere, has demonstrated, the privatisation of state companies will create a profit boon for international capitalist vultures while resulting in savage wage reductions and massive job cuts.

Responding to the report, éirígí spokesperson Daithí Mac An Mháistir said: “It is incredible, but not entirely surprising, that a right-wing ideologue such as Colm McCarthy is proposing that the solution to the crisis of capitalism should be a further entrenchment of the very philosophy and policies that collapsed the economy and destroyed the livelihoods of tens of thousands of workers in the Twenty-Six Counties.

“By supporting this proposal, the Labour Party has betrayed the tens of thousands of working people who voted for them in the recent election in the mistaken belief they would represent change.

“Instead, they have been presented with a Thatcherite plan to transfer public wealth into the hands of a wealthy elite of private investors who will strip the economy of vital publicly-owned wealth generators, slash wages and working conditions and consign thousands of workers to the dole queues.”

Mac An Mháistir added: “The only people who will benefit from the sale of state assets will be billionaire businessman such as Denis O’Brien and Tony O’Reilly. It is vital that all of us – workers, trade unions and political parties of the left – get organised to defend our public assets and resist 21st century Thatcherism.”

 

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