Student protests: Both students and markets are upending the case for cuts
Economic crisis across Europe and growing opposition at home are starting to cut the ground from under the coalition
o Seumas Milne
o guardian.co.uk, Wednesday 24 November 2010 21.00 GMT
Two years after the eruption of the greatest global economic crisis for 80 years, its aftershocks are continuing to make themselves felt throughout Europe. Across Britain today, thousands of school and university students staged multiple demonstrations and occupations against the tripling of university fees and scrapping of educational maintenance allowances for poorer teenagers.
In Ireland a profoundly discredited government unveiled yet another slash-and-burn austerity programme in the wake of its humiliating forced banking bailout. And in Portugal a general strike brought the country to a standstill in opposition to a parallel package of savage cuts as speculators threatened it with a similar fate.
The latest shock wave has served to ram home the reality that this remains first of all a crisis of the banks and the private sector – not, as the British government would have it, of profligate governments and public debt, which only ballooned to fill the gap left by market failure.
Ireland, after all, plunged into the crisis as a low-spending, low-tax neoliberal poster boy. It has followed the demands of the fiscal consolidation fantasists to the letter – only to dig itself deeper into recession, deficit and uncontrollable debt. The latest EU-dictated austerity programme is now being imposed to save its banks and big businesses – as well as the European banks that lent to Ireland, including Britain's.
Yesterday's combination of a 12% cut in Ireland's minimum wage, while its rock bottom corporation tax rate was protected like a holy relic, couldn't have made the point clearer.
At stake everywhere is who will pay the costs of the crisis. So far the answer has been unequivocal: it will not be those who triggered the meltdown, but the wider populations who had nothing whatever to do with it. It's hardly surprising that student protesters are demanding to know why, if George Osborne can suddenly find upwards of £7bn to protect Irish and British banks, the coalition can find no alternative to cutting university funding by 80%.
Naturally, it suits ministers and the coalition-supporting media to portray the student protests that kicked off a fortnight ago with a 50,000-strong march in London as either spasms of mob violence or the self-indulgence of privileged youth. Nick Clegg tried it on again on Tuesday night, claiming the mantle of social justice and telling protesters to "listen and look" at the government's student loan package "before you march and shout".
But not many students are going to listen to a man who has done a 180-degree about-turn on his pledge to oppose any increase in tuition fees – or take seriously his boasts about social mobility, when the wealthiest will pay less and polling already shows the new fees discouraging most would-be students from deprived backgrounds from going to university at all. Nor are many people who saw today's images of London school pupils protecting a damaged police van likely to be taken in by attempts to portray the mass of protesters as hooligans.
Instead the students have offered an inspiration to a public largely stunned into passivity by the scale of government plans to dismantle Britain's welfare system and public services. Drawing on the experience of school walkouts and student occupations during the Iraq and Gaza wars, the new student activists have also focused on issues that bring together working class and middle class – just as the ongoing street campaign about Vodafone's tax avoidance has helped dramatise the hollowness of the government's insistence that its deficit can only be closed with job-destroying cuts in services.
Regardless of fringe rucks, these protests are more likely to lay the ground for wider public and industrial campaigns than frighten them off. And they come at a time when the resurgent international crisis is cutting the ground from beneath the coalition's own argument for deep cuts – and strengthening the case for a change of direction.
Across the so-called peripheral EU states, from Greece to Portugal, Ireland to Spain, governments are slashing spending, pay and jobs to rescue their toxic financial systems and appease the bond markets. But the markets aren't appeased at all, and are now "fretting over the lack of economic recovery", as City analyst Graham Turner puts it – a lack of recovery ensured by the very same cuts. Nor do they believe that states like Ireland or Greece can shoulder the groaning burden of debt they are taking on, which is why bondholders are already factoring in the expectation of debt restructuring, or even default.
The prospect of outright defaults, renewed shocks to the European financial system and the breakup of the eurozone is growing. Instead of pressing for investment in growth as the only way out of the crisis – even now Ireland has significant cash balances and reserve funds it could draw on – the EU authorities are driving its most exposed members towards an economic precipice. The real choice will increasingly become whether they opt to default on their own account, as Argentina did in 2001, or allow their creditors to dictate terms.
The balance of costs and benefits between those options is already shifting fast. And for a British government committed to cutting its way out of the crisis, which won't benefit from the lagged effects of Labour's stimulus for much longer, the renewed threat of recession, debt and banking crises in the rest of Europe only underlines the perils of its programme.
For now, student and other protesters have begun to fill the gap where the opposition should be. That opening will be bolstered by the newly elected Unite leader Len McCluskey's commitment to build an "alliance of resistance" around the trade unions, broader than the campaign that saw off Margaret Thatcher's poll tax, to press the coalition to change course.
But to get beyond forcing local and isolated U-turns, a national political focus will also be needed. Ed Miliband has been under attack this week for failing to give a strong enough lead against the coalition. His single biggest obstacle are those on his own side who have yet to accept his election, or grasp that Blairite enthusiasm for competitive cuts, tuition fees and low taxes on the rich is scarcely the way to mobilise public opposition to Cameron and Clegg. But real life is already settling the argument.
Student protests: Both students and markets are upending the case for cuts | Seumas Milne | Comment is free | The Guardian
Student protests: Both students and markets are upending the case for cuts
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