Free-market entrepreneurs created the crash


Billionaire investor Warren Buffett commented on the US financial crisis that “it’s only when the tide goes out that you learn who’s been swimming naked, and Wall Street now looks like a nudist beach.” Well when it comes to Ireland, the receding tide of the global economy has revealed that not only were our business and political elites swimming naked, they were engaged in a great big orgy as well.

They enthusiastically built up the property pyramid and pumped a vast quantity of hot air into the great debt-bubble, while enriching themselves through dodgy loans, dodgy planning decisions and every variety of backhander known to humanity. Probably one of the most sickening things about the boom was the way that the corporate media was full of hymns of praise to the entrepreneurial skills of our great leaders.

Well the bubble eventually burst, as do all bubbles, and it is now clear that the only legacy that our glorious leaders have left us from the Celtic Tiger is a ruined economy and lots of abandoned property. Unfortunately, however, it is not the great and the good who will be paying to tidy up the mess, it’s you and me, the ordinary worker. We will pay in terms of cuts in the services the state provides us, downward pressure on our wages and benefits and most of all, the increasing possibility of finding ourselves unemployed against our wishes.

In 2008, the unemployment rate almost doubled, rising to 7.8% by November, with 277,200 people on the dole. Most of the job losses in 2008 came in the construction industry. The bad news is that 2009 will see the job losses in construction continue and spread to the rest of the real economy.

This is because our genius free-market entrepreneurs came up with a brilliant new business model based on what they called ‘leverage’. Basically, this meant that it was more profitable to build businesses with borrowed money than it was to do so through capital investment, all thanks to the fact that the bankers’ chums in government wrote the tax laws so that borrowings could be written off.

With the collapse of the credit bubble, many companies now find themselves in enormous debt that they can’t pay back and will be forced to undergo huge downsizing or even bankruptcy, meaning lots more people out of work and facing serious hardship, especially considering the legacy of huge mortgage and credit card debt from the boom years.

And we can’t expect any help from the political elites. Our political leaders, from across the spectrum, have been united in their response to the boom. They have poured billions of public money into futile attempts at re-inflating the burst bubble of the developers and bankers, while putting the squeeze on the public, through cuts in health care, pensions and education. It won’t be long before the media is blaming the ‘lazy scroungers” on the dole for the mess our leaders have made of the economy.

None of this comes as much of a surprise to us though. Busts are just the occasions when the greed, stupidity, recklessness, corruption and gross unfairness of our capitalist economic system are laid bare for all to see. A change of government or a new set of regulations will change nothing. We need a fundamental reorganisation of our economy and for that we need a fundamental change in how society is run. That is what anarchists mean by revolution.

This article is from Workers Solidarity 107 Jan/Feb 2009

You can read WS107 online or download the PDF file