The opposite of NAMA = a 4 day week

national | miscellaneous | opinion/analysis Sunday October 31, 2010 21:53 by ordinary citizen

A more balanced society is possible from the ashes of this mess we are in.

The opposite of NAMA = a 4 day week?

The housing boom was accelerated in the late 90s, when the Finance minister Charlie McCreevy lowered Capital Gains tax from 40% to 20% thus encouraging people to buy second and third houses. If we had a left-wing minister in charge back then, someone like Joe Higgins, he may have increased the Tax to 50% to discourage investment in property and allow first time buyers to get on the property ladder without competition. This would have kept house prices at a reasonable level and allowed our wages to stay low and allowed us to remain competitive. Instead the short-term tactic of taking in large taxes, such as Stamp Duty, during the housing boom created the mess we are in now.

NAMA was then thought up and explained as a way of freeing the banks to be able to give loans out again. To any neutral observer there were so many things wrong with this tactic. For example why not just nationalise the banks and thus reward the state with their profits rather than just deal with their losses. My feeling is that there was a combination of ideology and slyness in the decision that was made. The ideology was that the state should have as little do with the market as possible, the free market model most economists have been thought for the last few decades and which the FF/PD government followed religiously, repeatedly saying its mantra of “let the market decide“ through the virtual good times.

Decisions outside the box are rare in a system that is all about rewarding those who blindly memorise facts and figures, if you follow the rules and make no waves you are rewarded, while those who are creative and imaginative are left on the fringes. This became obvious to me in 1997 when the Independent Newspaper was pumping out pictures of Bertie on its front page for weeks coming up to the election. A front page story I remember was of the then Taoiseach John Bruton opening the Portlaoise bypass but instead of it being portrayed as a positive for the government the article went on about Bruton being left standing there as Bertie’s procession drove by using the newly opened road. Then shock, horror the last editorial before the election ran and proclaimed that the Indo was supporting FF after years of being a Fine Gael paper.

The purchasing of it by Tony O Reilly, a man who turned down an offer to be a minister in the ‘77 FF government (after all why take the heat from the public when you can have as much influence in the background) had not been a signal to the experts of a possible change in direction. Not until the editorial was there any real mention of the new allegiance of the paper by the political commentators because they were too set in their ways to see what was clearly in front of their eyes.

The other reason I feel we did not nationalise the banks is that they knew too much about the goings on within FF since Haughey had taken over and corrupted it to the core. Add this to all the wealthy donors who are benefiting from its bail out and the whole thing stinks of either mass incompetence or massive corruption.

Behind the façade of allowing banks give out loans again, what NAMA was really meant to do was to stabilise falling house prices and because of this, many of the 80% of people who own their own homes were willing to add massive debt to the country to keep house prices artificially high(not admitting this openly of course). The whole logic behind this decision was one of leaving the burden of the mistakes made during the boom years in the hands of future generations.

These decisions are being made by old men, the repercussions of which will still be felt when they are dead and buried, much the same as can be seen in respect to Climate Change and resource management. Old men like Pat Kenny and Kevin Myers argue the validity of facts backed by over 90% of world scientists. If the same amount of evidence said there was a giant meteor about to hit the planet they would be the first to call for all our resources to be put into stopping it. Instead they fight the facts and figures so that they and their wealthy friends can continue living their wasteful lifestyles and feed this image based culture of 4x4 cars without tow bars (cars not being used for that they were made for) which at its deepest level is really hiding low self esteem.

How many people who argue against climate change drive big cars or use public transport regularly? This wasteful lifestyle choice will have pushed the world into horrendous climate chaos by the time they are taking their last breaths. Remove any discussion about the validity of the science and your still left with the fact that this limited resource has taken millions of years of carbon decay to form Oil. The transition into a post oil world will take 20 years according to many commentators including Eddie Hobbs of all people. At the heart of environmentalism is a deep urge for self survival because if the compost hits the fan it will be humans that will be extinct and nature will begin the slow process of rejuvenation. anyone who has time or is intelligent enough to look at the big picture can see this.

The same people who told us that the free market was sound are now telling us that economic growth based on unlimited resources is a sustainable way to live, “sure wont science save us” they bleat as we drive cars using a nineteenth technology. Their assessments are based on a 19th century economic logic of abundance when it would take 5 planets to sustain us all at a US standard of living.

Through NAMA these old men hoped to divert the financial chaos they had created onto the next generation, while keeping house prices high enough to allow them be re-elected. What if they had not got involved? What if NAMA was not invented? We would probably be where we are now owning AIB without the extra multi billion Euro debt placed on future generations by NAMA.

In the UK there was a semi left-wing government in power during the crisis and they dealt with it very differently to FF, who were giving the banks whatever they asked for. Labour under Brown dealt with the banks differently, Can you imagine the budget could have been even tougher on the poor of Britain if this revenue stream was not in place. The banks were basically told what was happening and what share the state was taking in them thus ensuring that the state could make a profit in the future. There was a great BBC program about this hectic time period and it explained that the bankers were told to wait in a corridor while the British Treasury came up with a plan and they either agreed to it or their banks would have been wiped out. Measures like taking a majority share in RBS were calculated to have made the state £10billion in April of this year. They also brought in a 50% tax on over £100,000 a year, a move the Tories would not have done but cannot remove now as there is such a high tax take from it. Compare this with the 30 odd billion we will have had to pay out on Anglo and the comparisons between a right-wing pro wealthy and left-wing pro average income people political parties are glaring.

If the housing market had been allowed settle house prices may have reached where they are now earlier but not much else would have changed. I heard an expert recently say that he expected house prices to level at around €130,000 compared with the average of €300,000 at the height of the boom. We are presently at €195,000. This €130,000 figure makes sense to me because the average take home pay after taxes is over €500 a week and with there increasingly being only one income in households and about 40% of our incomes going on mortgages, €130,000 is about what people in this scenario can afford.

This is not what people in negative equity want to hear but accepting that it may happen will force us to have to look at this scenario. This time will clearly define whether a government represents the people or the elite. Firstly there should be downsizing for anyone with a house too big for them, a one child family does not need a 4 bed house. Some sort of credit should be given to in terms of the renegotiated mortgages, as should be happening with Anglo Irish Bank. Some way of working out the energy that was put into paying for the house so far. The work put into saving for the deposit and the amount paid should be calculated as a percentage of the new mortgage.

This would be the case if a government was there for the good of the people like a left-wing party being in power, if Joe Higgins was Minister for Finance. If a right-wing party is in during this time, there will be mass evictions and houses being boarded up. This is when those who still have large amounts of wealth in their bank accounts, like those who had money and property before the Celtic Tiger, will start buying up cheap property, waiting for the good times to eventually come back and to rake in large profits. Capital breeds capital. The top 1% of people increased their wealth from 36% - 38% in the two worst years for the ordinary person 2007 to 2009. Ref. http://www.sbpost.ie/commentandanalysis/the-rich-get-ri....html

If this happens it will be the exact opposite of the scenario above of first time buyers getting on the property ladder without any competition from investors. In this case the banks will have massive restrictions, like looking for large deposits, which will mean that it will be the already wealthy investors who will have no competition when purchasing property.

Those in negative equity could be rescued by oil price increases. As oil becomes harder to get at and thus more expensive, it will go up in price thus raising the price of all goods and creating inflation that would make money less valuable and make these mortgages more manageable. This would create huge logistic problems but at least there might be fewer repossessions.

What if house prices fell even further than this €130,000 average. High capital gains tax would be necessary to stop the vultures from levelling the price. What if they went under €100,000 and more in line with British prices? This would free up more money for people to spend on other things and thus stimulate economic growth. Another possibility from this would be that people may not need to work 5 day weeks and could get by on a 4 day week as happens in Holland, where the low cost of renting means that people can live on a 4 or even 3 day working week, thus allowing the equivalent of zero unemployment in some areas. With the mechanisation of labour there will never again be enough work for us all to work 5 day weeks but there will be enough for us to work a 4 or can you imagine the joy of working a 3 day week?

Our society will have truly evolved, allowing more time for what life is really about; family, creativity, community building, charitable and environmental actions on top of consciousness expansion. Amazing possibilities are available, beyond what our present restricted, competitive mindset can perceive (ref. John Lennon - “Working Class Hero”), if we find more freedom in our lives. Every generation has strived to make life better for the next. This system has been doing the opposite leaving the next generation with massive debt and an environmental, and thus resource nightmare. Its time to take back control of our future from the greedy, short-sighted, dull people who have been making decisions for too long.

If we come at the present situation from a completely different angle from one of massive virtual debt, after all it was a virtual boom from 2002 on, to one of massive assets. We have built enough homes to house the people of this country for the nest 50 years and we have loads of hotels to turn into old folks homes, complete with swimming pools. As society learns to live in a post oil age, there will be more demand to be near nature to produce organic food, which requires little or no oil if manpower is abundant. In such a scenario the ghost estates could become filled with Agrarian workers, ideally working in co-operatives where all are rewarded fairly.
A 4 day week government department could be set up to help any older workers who may have paid off their mortgages and want more free time to facilitate this. If there were 4 people willing to work a 4 day week, then there will be a 4 day week job for someone else. What we need is people in power who can think outside the box and come up with alternative solutions that can make our society better for us all.

Maybe from the rubble of the free-market, self-absorbed, work till you drop model that is dying before our eyes, a more inclusive, balanced and all round happier society can spring up. All the ingredients are there, most importantly the desire for change that this crisis has created. The system we have been led into through manipulation will have fueled its own destruction by creating a generation willing to accept massive social change not possible in a more stable environment which would have been possible if the market had been kept on a leash from the start.