As some of you may know, tomorrow the Republic of Ireland will vote on an amendment to the Irish Constitution that will enable the Irish government to ratify the latest EU agreement, called the "Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union."
The government, the political parties, and other interested groups have spent millions of Euro on both information and propaganda about this referendum vote. Sadly, the majority of Irish people still have absolutely no idea what they are voting on.
Called the "Stability Treaty" officially and "Austerity Treaty" by opponents, wild claims are flying back and forth from both sides, and this has muddied the waters of the debate and distracted the public from the far reaching implications of this choice we face on Thursday.
So what are we voting on?
The official position of our government: Stability
Stability Mechanism
There is one argument for approving this treaty (yes, just the one). Every justification, assertion, threat, warning, and promise made by the treaty's supporters is centred around this one small stipulation of the treaty: a big pool of money will be created upon the treaty's ratification (called the European Stability Mechanism, or ESM), and if Ireland does not ratify the treaty we will not have access to that pool. The sole argument for approving the treaty is to give Ireland access to the ESM.
This would give most rational observers pause: approval of a constitutional change to write into law a 24 page treaty based on one line in that treaty might seem irrational. It is. For that reason, the treaty debate itself has become irrational, which has resulted in the public's bewilderment and a lack of coherent discussion on the contents of the treaty itself.
Free Money
Opinion polls indicate that the referendum will pass. The logical inference is that the public is therefore not rational. This is true everywhere, but perhaps even more so on this island than in most other places.
A music producer once said "reality, that arid bottleneck of European thought, comes to seem much more relative and negotiable [in Ireland]; something to be continually re-invented, even at risk of losing touch with it completely."
Over the first two-thirds of the first decade of this century Ireland lost touch completely with reality. Living in a dream where almost everyone in the country was a millionaire, we felt like we'd won the euro-millions jackpot; money flowed into this country like oxygen flows into a fire. We were told that houses we'd bought for £100k in the 1990s were all of a sudden worth €1.5 million. It was a wondrous dream, and - like any good dream - nobody wants to wake up from it.
The tacit promise made by the yes side is that everything will go back to the way it was, that we'll sail through this storm with the aid of the stability provided by the EU and everything will go back to the way it was. Every building in this country will go back to being worth €1million or more, and we will all return to being the millionaires that Fianna Fail assured us we were.
Reality
The truth is that nothing is that simple. You cannot push a snooze button on life and expect that the dream will continue in full swing. The Reality is that no matter how we vote on this year's referendum, our economy is still in the doldrums and we will all still suffer for it.
This is a difficult thing to admit, but the truth is as follows: no matter how we vote on this referendum, we will face more economic hardship.
The Choice
I know that the No campaign has been making the assertion that we will not face further austerity if we vote No. This is untrue.
I know it is untrue, Gerry Adams knows it is untrue, Declan Ganley knows it is untrue, the university economics professors who advocate a No vote know it's untrue. You cannot put a pig mask on a sheep and pretend it's an actual pig, and this country is in for some turbulent economic times in the coming years if we vote no.
However, we will face those same trials and tribulations if we vote Yes. The difference is, if we do vote Yes, not only will we face some period of economic uncertainty, we will permanently lose our democracy. Sound scare-mongering? Let me explain.
The Outcomes of voting Yes
When we vote for a political party, we are pointing the government in the direction of a set of priorities on which they should spend our tax money, based on the stated views of that party. That political party's ability to carry out our wishes is based solely on the government's ability to decide what it will do with the country's finances. How tax money will be raised, how much will be asked for, and what will be done with that money are at the core of every political campaign. These are the reasons why we vote for one government minister over another.
This treaty makes that decision for us, once and for all, and it would no longer be our elected representatives who have the final say in these decisions. Instead, a panel would be appointed at the discretion of the EU to monitor our finances. If our elected representatives then did not carry out the spending wishes of this panel of Brussels bureaucrats, the EU could then implement a "correction mechanism" which would remove any fiscal decision making power our government may have had left.
They still couldn't touch our corporate tax rate!
I heard our minister for finance say that too. It is entirely wrong. These EU bureaucrats could alter all of our tax rates as part of their budgeting powers to ensure we met the EU's deficit objectives within the EU's timeframe. Taxes are a part of fiscal policy, and this correction mechanism would encompass all fiscal policy.
I also heard that "corporate tax" is not mentioned specifically in the treaty. Of course it's not. If you're buying a house, does the contract to transfer ownership specifically state "the internal walls" will be included? Of course not, they come with the house. In this case, our fiscal decision making is the house, corporate tax is just a wall.
But if we vote yes there will be no more austerity
This is also complete and utter male-cow-manure. The government has put forth that no further cuts will be required for us to meet our 2015 debt reduction, and their talking points aggressively accentuate that assertion. However, the numbers on which they are making their calculations are inaccurate.
Most importantly, the assertion that we can reduce our deficit by 2015 is based on projections of 3% growth in GDP through 2013, 2014, and 2015. Sure, if our economy expanded that rapidly (it's moderately realistic for non-recession times) and government spending remained the same or reduced slightly, then our deficit might just make the EU requirements. But, for anyone not entirely cut off from world events, this is not going to be possible.
A number of different factors have changed drastically since Fine Gael initially made those predictions that they're still running with. Greece is on its' way out of the Eurozone and Spain had to nationalize the debts of one of its biggest banks, to name just a couple.
With the continuing focus on Austerity and debt reduction, there is no way that the economies of the EU can withstand the additional pressure this will put on our finances. Furthermore, the €1 trillion pricetag that economists put on Grexit coupled with the increase in debt obligations by Spain will likely end up having to be paid through the ESM. As such, we can look forward to making our full €11 billion contribution to it sooner rather than later. One has to wonder if we can't afford our current debts, how we can afford to take on €11 billion more.
Austerity in a recession
One of the other main factors that ensures Ireland will not have GDP growth sufficient to cover the debt obligations the government has taken on from speculative investing in and by our banks is the current focus on Austerity being driven by Germany and, to a lesser extent, England (and formerly France).
If you ask any first-year university economics student what the outcome of cutting public spending during times of recession is, they will tell you it shrinks GDP. This is very basic - if less money flows into the economy, the economy cannot grow.
So why are we focusing on policies that shrink the economy just when we need the economy to grow, you may ask. The answer does not come from the best interests of Ireland, but rather goes back to the sources of oxygen that caused the blazing inferno that was the Irish economy in the first half of last decade.
European banks - with a significant percentage of investment capital coming from Germany - made bets that what are now ghost estates up and down this country would be thriving villages, with each house being worth a million euro or more. Setting aside that this theory disregards decades of economic experiences with housing booms all over the world, lets look at what happened with the huge influx of capital our banks - most notably Anglo Irish - experienced during that time.
Illogical gambles were made on behalf of the European investors (bondholders and such) and those gambles did not pay off. The end result is that the same European investors are now financing bailout funds - at high interest rates - to cover the losses their gambles made (which were taken on to government books). These gamblers - sorry, investors - are dictating policy to the conservative governments of the EU, and with their flagship Germany (where wages have dropped 30% in recent decades - a testament to the true goals of those investors) and their spokesperson Angela Merkel, they are being effective.
The most effective they have been so far is to convince Irish voters that taking on more debt and reducing public spending in order to pay them the full winnings of their gambles (even though they lost; like asking the inhabitants of Las Vegas to all chip in to pay you for your high-odds roulette spin even though the ball did not fall in your favour) is somehow a good idea.
The Yes Result
Our government debt will continue to include the gambling debts of European banks - via their local proxies Anglo et. al., and will increase to include the debts incurred by Grexit and any other government bailout that may happen in the Eurozone. Our economy will continue to shrink stemming from the austerity measures (1000 job losses in a week combined with 140 job gains does not a good economy make) and we will not meet our deficit targets, making our need for ESM funds a self-fulfilling prophecy. However, ESM funds - into which we will have to contribute €11 billion - will not cover Grexit, and more debt - thus more austerity and tax increases, no longer decided by our own government - will follow.
Be Optimistic on a Yes vote!!
Ok, best case scenario is that the ESM covers all Irish government debts and the government does not go bankrupt. However, when these economic hard times have long since passed, this constitutional amendment will still be on the books and we will have lost the opportunity for our children to decide what is in their own best interests at the ballot box.
Voting No and risking not getting our part of the pot of ESM gold
The pot
It is important to note that the ESM is not some magical money tree that will solve all of Ireland's problems. Firstly, there is the initial debt obligation we would be committing ourselves to if we approve this treaty. That obligation is our contribution to the pot, which will be €11 billion. As soon as we ratify, we will have to pay €1.1 billion, and as soon as ANY country requirees funds from it, we will have to pay the remainder of our €11 billion contribution. This will be included in our government debt.
Worst case scenario outcomes
Some of the proponents of a Yes vote point out that the EU will happily let us leave the Eurozone with no further funds, and we will return to the Punt at a 60% lower value and face years of economic hardship.
The basis of the assertion that we will be happily waved-goodbye-to on our way out of the Eurozone is Greece, and the fact that the EU and ECB have started planning for Grexit. However, it does not take into account any of what has been explained about the possible Grexit outcomes.
The most important point made by ECB and EU alike about Greece leaving the Eurozone is that the damage will be containable, because it is just one country leaving. If you search Google news for "contagion" you will find countless references to how the EU can handle the exit of one economy provided that no other economies follow suit.
It is clear at this point that it is no longer in the best interests of Greece to remain in the Eurozone. They will be leaving, and the only fear from that the Eurozone has is whether the currency can handle the Greek exit. Based on the calculations made by big banks and the ECB, it can - but only if Greece is the only country to go. In every analysis of Grexit, even those quoted by the Yes camp, this is the pillar on which Greece's departure from the Euro can be handled.
As it stands, Irish taxpayers, and taxpayers across the EU, are carrying a debt burden borne of prospective gambles made by a microscopic percentage of society, and in doing so we are enabling the continuing functionality of investment banks like Goldman Sachs and the continuing multi-million euro salaries of their gamblers. Yes, the €1 trillion Grexit is tolerable, because the idea is the rest of the Eurozone economies will keep playing the game and pick up the slack of the debt burden which came about from those banks' gambles.
Government Debts with no money to pay them
One of Ireland's largest unions came out in support of the treaty because of the threat of no access to the ESM, and the conclusion that our government would not be able to continue to operate without it.
This might well be true. As it stands, the Irish government owes more money than it can take in. It is, however, imperative for us to remember why. The vast majority of the debt which has contributed to our government deficit is the debts of European investors - yes, the same ones we're paying massive interest rates to in order to cover those debts - through those Irish proxies like Anglo Irish Bank.
What has been entirely left out of the discussion, when it comes to dealing with the deficit - on which we are being illogically told to focus, rather than on focusing on growing our recessed economy - is a re-evaluation of the value of those debts. Put simply, if the investors still believe the ghost estates are worth millions each, lets give them the ghost estates at their purported value and let them try to get the monetary return on it.
The other, most often discussed option, is Ireland also leaving the Eurozone. All sorts of dire warnings have been made about this, and the general idea is that all of a sudden a loaf of bread will be £1,000 and the average salary will be something like £12,000 per annum. The basic premise of this (Yes-fear-mongering) argument is that Ireland does not bring anything to the table as far as self-sufficiency is concerned.
Please remember: The acres of farmland, the EU headquarters of Fortune 500 multinationals, and the undying spirit of the people of this great nation will not cease to exist simply because we reject the illogicality of the plan for Europe drawn up by the investment bankers who financed Angela Merkel's election campaign.
So what will it be?
If we vote yes, we increase our national debt and enshrine into law austerity guidelines, while simultaneously taking away any opportunity children in this country may have to one day have a say in how their tax money is collected or spent.
If we vote no, we face short term economic uncertainty which will not benefit those who blew up our government debt in the first place.
The answer is clear. Vote No tomorrow.