Democratic Control over the Economy

Speech by Brendan Howlin TD, Leader of the Labour Party

Tom Johnson Summer School 2019, Galway

It is important for all of us to be challenged by analysis and argument about our society’s problems and how to solve them.

Listening to good analysis is also important to flush the facile right-wing media commentary out of our brains.

Labour Youth has done an excellent job of lining up such an excellent range of speakers.

I enjoyed hearing more about Diane Abbott’s life story, and I very much welcome her resolute support for the UK remaining in the European Union.

The theme of this year’s Summer School is “Defending Democracy”, and for good reasons:

Trump. Brexit.

Viktor Orbán’s attacks on liberal democracy in Hungary. Russian military aggression in Eastern Europe.

The rise of the far right across Europe.

The list goes on.

In Dáil Éireann, we luckily don’t have a strong far-right party, but we do have reasons to defend our democracy.

Votes by the majority of parliament are routinely ignored by the Government.

Opposition law are passed by a majority, only to be blocked by the minority Government, with dozens of Bills in limbo as a result; including Labour’s Housing (Homeless Families) Bill 2017 and our Local Government (Restoration of Town Councils) Bill 2018.

What does democracy mean in this context?

I want to offer you some thoughts on the idea of democratic control… and how Labour has and will continue to seek stronger democratic control over our economy as well as in our law-making.

When the Labour Party was founded 107 years ago, Ireland was a profoundly unequal country with appalling health outcomes.

In 1912, average life expectancy was 54 years.

One in eight children died before the age of five, mostly due to preventable diseases or accidents.

Then, as now, there was health inequality: People from the poorest areas were far more likely to die young.

Today, Ireland is one of the world’s wealthiest countries, and most people enjoy a relatively comfortable lifestyle.

Life expectancy is 82 years.

And child mortality is down to just 0.28%.

The Labour Party – and the labour movement – were central to achieving this transformation.

As were nurses and midwives, when it comes to the incredible improvements in life expectancy and child mortality.

But what drove change?

Many things; including new scientific ideas and technology.

But clearly, the election of a Government on the basis of near-universal suffrage from 1918 onwards had a lot to do with it.

You can see the same pattern worldwide. With democratic control over law-making and national budgets, democratic governments have brought about real improvements in education, healthcare and housing.

As recently as 1948, the global average life expectancy was 48 years.

The world average is now 70 years.

We are continuing to see the benefits of democracy and human rights being rolled out across the world in terms of greatly improved education and healthcare.

But these benefits didn’t just happen.

People’s lives improved because of better law-making, fairer taxes and spending on public services.

Labour parties have pushed for better health and safety in the workplace to reduce injuries and deaths at work.

And Labour parties are still fighting for free-of-charge education and fair access to healthcare based on medical need.

The need for a Labour Party is as great as ever.

When Labour parties are given the opportunity to govern frequently – like in the Nordic countries or the Netherlands – they have delivered extensive improvements in people’s living standards.

The central reason for that success is the influence of Labour parties on the economy.

Labour parties see a strong role for the State in both regulating the private sector and in directly producing goods and services through publicly-owned enterprises and agencies.

Liberals believe that a market economy, with minimum regulation, will govern itself, to deliver goods and services efficiently and fairly.

Clearly, competitive markets can deliver efficiency, but certainly not fairness.

 

Unregulated markets produce greater inequality. It is only through the enforcement of democratic control and regulations that market economies benefit all of society.

 

Ireland’s market produces the highest level of income inequality in the OECD. But this is reversed by the action of the State, through welfare payments that reduce income inequality to the European average.

The third main view of the economy is conservative.

    

Conservatism is simply the political imperative to preserve the status quo; to ensure that those who hold wealth retain and grow that wealth.

 

Conservative economic policies develop whenever people with property put their own economic interests – such as the size of their pension funds or their property value – before the interests of society or environmental sustainability.

 

The first problem with conservatism is that it reinforces economic inequality; many people do not have any wealth in the first place.

 

The second problem is that leading conservatives are not just concerned to preserve the value of their personal property, but of their extensive investments and business empires.

 

Conservatism, not liberalism, is the natural home of capitalists.

 

It is important to distinguish between how liberals and conservatives use the language of the “free market”.

 

 

Liberals are involved in a legitimate, technical debate with Labour parties about how much or how little regulation is needed to get markets to deliver efficiency, innovation and fairness.

 

There are some “liberals” in that sense in both Fine Gael and Fianna Fáil, and indeed the Green Party.

 

But the two right-wing parties are also deeply conservative about economics.

 

Conservatives really mean that they want to engage in economic action without democratic control.

They don’t care about market competition or innovation.

Asserting democratic control over the economy, in Ireland today, means building a well-regulated social and environmental market economy.

We need stronger collective bargaining and environmental protection.

Ireland’s economy is far too influenced by free market ideology from the UK and USA, as well as by home- grown conservatism.

But with Brexit comes the necessity of closer integration with the European single market – and greater distance from the British market.

Brexit creates an opportunity to steer Ireland’s economy in a new direction.

A new economic model for Ireland has to be Labour’s central goal.

Thanks to Labour and the trade unions, employment law in Ireland has become robust: from paid leave through to Workplace Tribunals and anti-discrimination law.

But conservatives have created zero-hour contracts, new forms of self-employment and other ways to avoid workers being protected.

Labour has responded with new laws to ensure employees have certainty about their hours, and to ban bogus self-employment.

But unless we become stronger, we won’t have the power to impose a rules-based economic system.

A real challenge for Labour is that multinational corporations are getting harder to control by any one government. That is why governments need to co- operate in institutions like the European Union, to have enough power to tax and regulate even the global financiers and the digital giants.

Conservatives are pushing back against regulation in other parts of the economy.

With Labour’s influence, housing regulations have improved, so that people can live in well-built homes, with decent living space, storage and light.

But conservatives are investing heavily in student accommodation, because unit sizes are smaller and the standards are lower.

And they’re investing in “co-living” dwellings, which are essentially student accommodation for professional workers.

If we are not careful, this will become a way of reducing housing standards across the board.

But it is not enough to regulate the private market.

Sometimes democratic control in the economy needs direct State involvement.

Housing is the prime example.

Nearly every West European country has a much larger share of public housing than Ireland.

As well as regulating private rent levels, the State simply needs to build tens of thousands of houses and apartments, as a direct investment. Just like it did in the past.

The final point I want to make is that democratic control over the economy applies to public services too.

Health, social care and education are part of the economy, not separate from it.

Conservatives want to profit from those parts of the health economy and the education economy that are in private control.

If we want to achieve genuinely free-of-charge education, and if we want to push private profit out of mainstream health services, then we have to take on the vested economic interests that support the building of private clinics in each of our public hospitals, and which support the continued divide between State schools and private schools.

It is Labour’s mission to convince the public that stronger democratic control of our schools and hospitals is the best way for us to improve outcomes and to improve equality of outcome.

The failure of the current system is all too obvious.

A near-record 78 patients were on trolleys in University Hospital Limerick in recent days.

In University Hospital Galway, there were 3,465 patients on trolleys or chairs between January and the end of June this year.

The National Treatment Purchase Fund shows that there are more than 560,000 people waiting for a first public hospital outpatient consultation.

Of course, those with the means to do so can avail of a private appointment to avoid those long waiting times.

That simple fact starkly illustrates the inequality of our health system, and also the economic incentives that exist for those who want to maintain and grow the provision of private medicine.

It also underlines the difficulty we face in implementing the SláinteCare Report, when those who are better off are less personally invested in the task of fundamentally changing the inequality in our health system.

That is where Labour must build public support for change.

The Irish Nurses and Midwives Organisation are on the front line of trying to make our health services work in impossible circumstances.

As are health support staff, for whom SIPTU is currently seeking justice in relation to the job evaluation scheme.

It is our duty, in the Labour Party, to work closely with the trade unions to seek the transformational change that is needed – and the change of economic policy that is needed.

This indicates the problem for Labour in entering into coalition government with either of the right-wing parties. We could easily have a Labour Minister for Health after the next general election, but unless we have a left-led government, we are not going to see enough changes to economic policy to deliver a universal, fair health system.

I welcome Labour Youth’s decision to give this year’s Thirst for Justice Award to the INMO.

This is not just recognition of their recent strike action on behalf of their members, but it is recognition of their determination to see the creation of a truly fair and universal healthcare system in this country, which is an ambition fully shared by me and fully shared by the Labour Party.