Red Or Dead

Max McGuinness on why Irish Labour should follow its British counterpart...to the Left.

Over the past week or so, all of the Irish Times' éminences grises - Vincent Browne, Fintan O'Toole, and John Waters - have once again addressed the thorny question of the future of the Labour Party, which now seems to be resigned to appointing the colourless Eamon Gilmore as leader in a coronation. Their criticisms break down along predictable ideological lines. Waters thinks Labour is too left-wing while O'Toole and Browne both blame Pat Rabbitte's centrism for the party's electoral failure. All of them, in their different ways, think that Labour is proposing the wrong things to the electorate. In fact, Labour's real problem is that it can offer nothing concrete to the electorate because it is condemned to a self-perpetuating marginal rôle within Irish politics. The only way it will ever get anywhere, as I have written here before, is by merging with and taking over Fine Gael as the Workers' Party/Democratic Left have done to the Labour Party itself.

Of the three Irish Times analyses, Waters's September 3rd  op-ed is easiest dismissed. His view is that the Labour Party is an unreformed, socialist monolith which belongs in the 1970s - "...attention is rarely drawn to the way the traditional Labour element continues to maintain a stranglehold on the party's soul".

Hogwash!

This is a party which campaigned in May on a policy of tax cuts(for the rich as much as the poor) rather than tax increases, which offered nothing like a single-payer, social democratic approach to healthcare, which proposed no major increases in the minimum wage nor enhanced continental-style social protection, which appears to have no alternative to conventional right-wing approaches to drugs policy, which flirted with knee-jerk nativist, anti-immigrant rhetoric, and whose leaders never even mentioned the possibility of re-nationalising former state companies like Aer Lingus and Eircom let alone the word "socialism". What's Left in all that, I ask you? Labour under Pat Rabbitte(and Ruarí Quinn and Dick Spring before him) has become an entirely centrist, and occasionally right-wing party. It is to the right of the French Socialist Party, the governing Spanish Socialist Workers' Party and even the German Social Democratic Party and British Labour Party. As much as Waters would like to set up a crypto-Stalinist straw man, the facts do not support this contrived picture.

Browne, on the other hand, has no illusions about the party's radical pedigree, declaring in his August 29th op-ed that "Eamon Gilmore is committed to keeping Labour in line with the consensus that all is fine with this society, bar a few glitches here and there which Labour in government can fix." Browne's focus is inequality and he thinks this should be at the heart of any left-wing party's programme: "The point of left-wing politics is to identify inequalities, broadcast the facts of inequalities and propose concrete policies to rectify inequalities." There are three problems with this. Firstly, the conflation made by Browne between poverty and inequality, while understandable, is not strictly warranted. Secondly, there is little evidence that a programme based on specifically tackling inequality will appeal to the electorate and thirdly, such a programme would be pointless in any event because Labour, in coalition with either Fianna Fáil or Fine Gael, would never get the chance to implement it.

Figures dealing with poverty and inequality in Ireland can be deceptive. In the past fifteen years, consistent poverty(defined on the basis of unchanging parameters such as the possession of a warm coat and the ability to eat at least one substantial meal per day) has plummeted in Ireland to 7% of the population(still way too high but a big drop from the 1980s). By contrast, relative income poverty has soared to  20% of the population in 2005. One is said to be in relative income poverty or "at risk of poverty" when earning less than 60% of the median wage so though wages have risen across the board, thus promoting a reduction in consistent poverty, the wages of the least well off have not risen as quickly as those of the wealthy, leading to increased relative poverty. For this reason, Michael McDowell opined at one point that inequality was a good thing because it tended to promote the welfare of the poor on the basis of a "rising tide lifts all boats" type argument. McDowell was pilloried for this at the time but his view is in fact consistent with the work of the  great liberal political philosopher John Rawls whom I know Browne admires. Rawls argued that a just society should be ordered according to the interests of its poorest citizen. So policies should be implemented which ensure that the poorest citizen faces, in Rawls's phrase,  "the best worst possible outcome". This is often interpreted as an argument for extensive redistribution and this is true under certain conditions but Rawls does not exclude a scenario whereby the poorest citizen would be better off in a society featuring large inequalities instead of one where a high-level of equality pertained. To give an example, it's clearly preferable in a hypothetical society consisting of ten people to be the poorest earning €100,000 when the richest individual is earning €10 million per year than to be earning a mere €1000 per year though everyone else is earning the same salary and could thus be said to be equal.

So though inequality can be seen as a negative in its own right - for provoking class polarisation and a breakdown in social cohesion - it is not the same thing as poverty and measures targeting poverty itself are of the greatest importance. This is the philosophy behind the British Labour government's programme of tax credits which have significantly boosted the incomes of the working poor. Tax credits are monthly cash payments awarded to those in work with an additional Child Tax Credit for those with children. For example, a two-parent family with two children where both parents work a 40 hour week, earning a total of £25,000 and spending £3,000 on childcare annually can expect to receive an annual total of £8,000 in combined tax credits. This more than exceeds any income tax or national insurance paid by the couple who are thus said to benefit from a "negative income tax" whereby their earnings have been topped up by redistribution. The system is often criticised for being overly complicated and under-publicised(many tax credits go unclaimed as a result) but the tangible redistributive effects are there to see.

Since 1997, those in the second and third lowest income deciles(i.e the 10%-20% and 20%-30% poorest) have seen their real incomes increase by 33% and 36% respectively. These percentage increases are higher than those experienced by middle class workers and even the top 10% of earners have recorded an increase slightly lower than the bottom third decile - 35%. The poorest 10% have seen their incomes increase at the slowest rate - 12% - which reflects the fact that a large number of these people are out of work. Labour's policies have been designed to tie income redistribution to work so the unemployed have been deliberately excluded from Gordon Brown's largesse. As a consequence, Britain has one of the highest employment rates in Europe - 72% of the total working age population compared to 67% in Ireland in 2005.

Since the introduction of tax credits a decade ago, the numbers in Britain living in relative income poverty have declined consistently(though they crept up again last year). However, overall inequality has continued to soar, largely due to massive increases in wealth among the very rich in the top 1% of earners. As measured by the Gini co-efficient, income inequality in Britain is in fact slightly higher than in Ireland but relative income poverty is lower - it was 19% in Britain as opposed to 20% in Ireland in 2005 according to figures in the 2006 CSO report Measuring Ireland's Progress. Though the difference is small, it must be taken into account that relative income poverty was at an all time high in Britain when Labour came to power in 1997 - much higher than the then Irish level. Subsequently, Britain has recorded declining rates of relative income poverty despite undergoing an economic boom(which naturally tends to aggravate relative income poverty). By contrast, Ireland has undergone a similar boom and has let relative income poverty rise continuously(though some figures for 2005 record a small decline for the first time - it is too soon to tell whether this will become a long-term trend).

In France, relative income poverty was only 14% in 2005 but it's worth noting that French incomes are lower than those found in Britain such that someone receiving just under 60% of the median income in Britain(thus defined as being in relative poverty) would likely earn over 60% of the median income in France and so would not be considered poor there. This information suggests that the European social model's cherished "equality" is not all its cracked up to be.

Irish social transfers are lower than their British equivalent distributed through Labour's system of tax credits. The hypothetical family instanced earlier with two children in receipt of a total earned income of £25,000 would most likely not even be eligible for the Family Income Supplement in Ireland.

This is what Irish Labour should be fighting for. The approach taken by their sister party is the stuff of successful modern social democracy which manages to combine poverty reduction with economic success. The fact that Blair and New Labour have been so widely maligned blinds their Irish comrades to their real achievements in government. When Fintan O'Toole dismissed the possibility of Irish Labour replicating  British Labour's transformation in a lengthy piece in last Saturday's Weekend Review, he only examined the implications for electoral strategy. Yes, Blair was able to build on a solid working class core vote which Irish Labour has never possessed. But the real lesson to be drawn from New Labour's experience is one of effective policy rather than mere strategy. New Labour's programme of income redistribution is in fact well to the left of anything Irish Labour offered the electorate in May. A similar transformation of Irish Labour would thus be, contrary to what O'Toole thinks, a shift for the party away from the bland, overcrowded centre ground of Irish politics.

For Irish Labour to adopt a programme of redistributive tax credits would require courage, not least because it requires tax increases to pay for them. Taxes have increased in Britain since Labour came power(by about 3% overall) though the extra revenue has been accumulated through stealth. This is regrettable since it lays most of the burden on the middle class rather than tackling the rich through direct taxes on income. British Labour also needs to pursue its redistributionist policies with renewed vigour since the decline in relative income poverty was halted last year after falling steadily since 1997.

In Ireland, such policies would directly appeal to the working class voters which Irish Labour so conspicuously fails to attract. Vague appeals to greater equality will alienate everyone. The real issue is poverty and equality should only be promoted in so far as it successfully reduces poverty. If making equality an overriding goal in itself harms economic growth then it will do little to aid the cause of tackling poverty.

Remains the question of winning power to implement these policies. Irish Labour's current marginal status makes its task much harder than the one which faced British Labour after its humiliating defeat in 1992 when it still had over 34% of the vote. For Labour to obtain power in the medium term, it can but hope to enter into coalition with one of the two big conservative parties. When I wrote at the start of this piece that Labour can promise nothing,  this was because none of Labour's possible commitments can be implemented without the agreement of either Fine Gael or Fianna Fáil. As it stands, neither of them will agree to the tax increases required to fund a British-style programme of radical wealth redistribution. Labour must become the largest party and the only way it can achieve this within the next 30 years is by taking over Fine Gael, re-branding the merged entity "The Social Democratic Party" and jettisoning that party's reactionary, traditional wing who logically belong in Fianna Fáil.

Otherwise, no-one should take anything the Labour Party says seriously because they will never be in a position to do what they say.

But you won't hear any of this from Eamon Gilmore.

Comments

[Jay Lyden]

Great piece of work. Funnily, the only time I heard a proposal for tax increases uttered in the last election lead up was from the mouth of Trevor Sargent during a radio interview. And I wonder when the red will finally disappear from Labour's logo? The outgoing Mr. Rabbitte spoke much of rebranding...

JL