Why I’m Voting Yes
Tomorrow morning, I will vote Yes in the Referendum.
This is for two main reasons, that the fiscal limits make sense for countries to adopt in the context of a single currency, and that we almost certainly will need funding from an international fund, and that the European Stability Mechanism provides the best opportunity for this.
With a transnational currency, there have to be certain constraints on government deficits to prevent contagion from one country to another. These constraints do not mandate further austerity.
In the short term, we are in a program managed by the Troika of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). They are lending us money to fund our government’s current inability to borrow on international markets. The restrictions on the government’s spending, mandating a combination of spending cuts and tax increases, are from the Troika, rather than any requirements of our euro membership. As things are, the state spends much more than it takes in, a gap that will have to be filled, but in a managed way in the hope of ensuring stability.
Balanced budgets in the long run are not the same thing as austerity. A balanced budget, or rather a deficit limit in this case, is about limiting the difference between the state’s income and expenditure. These concepts are explained in this video, produced two nights ago by friends of mine.
Governments can maintain both balanced budgets and relatively high levels of public spending, if they make that political choice. The Nordic countries have for years maintained both.
This Treaty was not designed with the Irish case in particular in mind. It was more focused on the case of Greece, which did overspend. So I accept the case of those who say that it would not have prevented the excessive spending here in the 2000s. That is not a reason to vote No. We need a currency that’s viable, and that means ensuring that a country like Greece could not put others at risk through its spending decisions.
I would like to see rules put in place to prevent governments within the euro area insuring debtors, rather than just depositors. What happened in September 2008 should not have happened, and the banks should not have been allowed to expect for that to have been on the table. But justified anger at this decision, and at the manner in which the European Central Bank is slow to reduce the amount to be repaid is not a good enough reason to reject this treaty.
We have no reason to expect that there would be a better deal on banking debt on offer before the end of the year on offer if we vote No. The very fact that it can come into force with 12 countries means that it was set up in a manner which allowed countries to opt out.
We will probably need funding. The best way to be sure of that is to vote for the Treaty. There is no way it could be easier or cheaper to get funding, whether from the IMF or if in some manner by a late entry to the ESM, than by passing this Treaty now. To quote from the preamble to the Stability Treaty,
STRESSING the importance of the Treaty establishing the European Stability Mechanism as an element of the global strategy to strengthen the economic and monetary union and POINTING OUT that the granting of financial assistance in the framework of new programmes under the European Stability Mechanism will be conditional, as of 1 March 2013, on the ratification of this Treaty by the Contracting Party concerned…
A post yesterday I read yesterday outlined the options we’d have for funding were we to vote No. None of them are appealing.
Even if we don’t need a second bail-out, to reject the mechanism by which we could receive one would send a signal of uncertainty to the markets. It is for these reasons that a survey of economists by Indecon showed that 90% believe that it is on balance in Ireland’s best interest to vote Yes. Similarly, in a survey by Dublin Chamber, 86% of business people are voting Yes.
I do not believe that we could vote No without risking social and political unrest. I read today sincere articles written by those I know from left-wing and from libertarian perspectives who would argue a No vote is needed to force fundamental restructuring. Perhaps they’re right. But as I look across the political situation in various European countries, I don’t want to see what might happen politically if an immediate adjustment to our budget had to take place.
So I am voting Yes as a small element in managing a recovery, and hopefully a new way of politics both domestically and in Europe.
We must campaign against the democratic deficit and waste of taxpayers’ money in European institutions. We must push against crony capitalism, and reassess how government should spend its money.
But we can do this and support the Treaty. So I will be voting Yes.