Letter - Reply to Coughlan

From Mr Jim O'Donnell, Brussels 13th June 2003

Answer to letter from Anthony Coughlan - Euro not to blame for Irish inflation

As with most of Coughlan's EU commentaries, that contained in his recent letter to Spectre is wholly a distortion and fundamentally a lie. There is no evidence to support the notion - and no good reason why - the Irish inflation rate is caused by the Euro. Irish inflation, after a long period below the EU average, has outstripped it for 4/5 years now and this well precedes the availability of Euro notes and coins. Is below average inflation in other Eurozone countries also

attributable to the Euro?

The report to which he refers breaks down the contributory factors to recent inflation in considerable detail and the Euro does not feature. Coughlan, in the middle of his piece uses the usual exit weasel words "Although the specific effects of the euro-currency is not addressed in this report....." and goes not to make claims for the "popular" view - not easy to access from Trinity College!! It does not of course stop him from producing the headline that he does, or from producing distortions in the text to bolster his obsession.

He adduces as proof, the cost of a consumer goods basket in France, Spain and Portugal. He makes no reference to another interesting detail: Ireland is fifth most expensive in the EU, and 3 of the 4 comfortably above them are the UK, Sweden and Denmark. I confidently expect Coughlan to produce a tract elsewhere which finds a way to blame this on the Euro too; something to do with immigrants, the lowered cost of labour in the service sector, natives

out of a job etc. It would be just as valid as the tripe he has in this piece, but personally, I think it's because each of them has a Royal Family.

Europe's problem since the euro is much more to do with deflation and falling demand than inflation - and here a progressive challenge is crying out to be made. Instead, in Ireland, obsessives like Coughlan help create the overwhelming "nationalist" consensus in defence of the right to capital taxes autonomy and the corresponding right to win the race to the bottom. Shamefully, there is scarcely a voice on the Left in Ireland which acknowledges this as the ultimate neo-liberal, anti-solidarity policy that it is.

Ireland's situation (and not necessarily "problem") is a decade of exploding demand which eventually came up against supply bottlenecks. A large part ofthis was labour costs catching up with European standards. (BTW, Enthusiasts for the right to devalue should be aware that the main purpose and outcome of devaluation is a reduction in the price of labour, thus making exports cheaper.) Unfortunately, Irish inflation may well be solved by a recession or a serious slowdown at least - wait for Coughlan to blame this on the Euro too!

Finally, I have long given up on any expectation of sense or honesty from Coughlan. I hope that the anti-Euro European Left will settle on a better and more principled mentor.