From Our Man in Ireland
The latest from our friend Rick O'Shea on Ireland's general election:
Ireland goes to the polls today, 25th Feb. We've had to endure a lot, a very lot, in recent months - more bank debt being loaded on taxpayers, more businesses closing, more unemployment and emigration, and the need to go to the EU/IMF for a bailout package in November of €67.5bn or over $90bn for three years. This was the moment when Ireland bemoaned its loss of sovereignty.
The new Government, to be formed on 9 March, will, however, preside over the restoration of sovereignty, if all goes according to the EU-IMF plan. We may yet celebrate again, more quietly perhaps.
However, there's a lot of economic heavy lifting to be done. The debt-GDP ratio could reach 124% before stabilizing. The bank bailout element of that could be 36% of GDP - which shows how much reckless lending and regulatory failure has cost taxpayers.
And a heavy price is being paid already in 14% unemployment and a renewal of emigration.A fuller analysis will follow on the result of the election. But what must be interesting to Ricochet readers is that the winner of the election, the party with most seats, will likely be Fine Gael, which promised not to increase income taxes, to cut VAT, to sell State-owned assets and to reduce public sector employment the most of all parties. Not quite the narrative of leftist commentators who were convinced that this would, finally, be the moment when Ireland became 'a real republic', or in other words, socialist. We were to have a left-led Government for the first time. Well, let's see.
But pause and rewind to November.
The prospect for Ireland was supposed to be: shameful EU/IMF bailout followed by stringent budget, virtually impossible to pass, followed by social unrest and political instability, a wave of public anger, a lurch to the left, the emergence of new political forces, and a surge for Sinn Fein.
Lurid portraits of the property boom and bust were filed in international media, making Irish people wince with their mix of fact, caricature and quips from locals, a sort of faux-anthropology any clever visiting writer could pen of Americans, Germans, French, British, anyone for that matter, to show up national quirks, absurdities and failures. Yes, I do indeed point the finger at Michael Lewis in Vanity Fair in particular. Very smart writing, but so what? No new facts, no new insights, just cleverality.
In the meantime, a budget and Finance Act were passed. Serious social unrest occurred, but in Tunisia, Egypt and Libya. There were student demos in, er, London...not Dublin.
Prominent commentators, who dabbled with rousing the people to a great new reform movement, fell away when the realities of winning votes dawned. The most prominent among them is Fintan O'Toole, Irish Times columnist, who regularly is interviewed for his opinions on international media, without any mention from those media of his high profile retreat from electoral politics.
An election has been held. People are angry, with good cause. But they vote with purpose. And wait til you see the result.
Beware of media narratives predicting the future.
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Comments :
Dec '10
Re: From Our Man in Ireland
Is Rick saying that the Irish electorate is voting for a party that promises to make them take their medicine because that's the only way their sick economy is going to recover?
Amazing! But that would never work in the USA, would it?
Jul '10
Re: From Our Man in Ireland
I remember way back in about 2007 reading breathless stories about the economic miracle in Ireland (and in Iceland, too, by the way). The theme seemed to be that these two countries had leveraged their way to wealth via the real estate and financial sectors.
And then they just collapsed, overnight. When leverage unwinds, things come down fast and hard.
Edited on Feb 25, 2011 at 1:55pmOct '10
Re: From Our Man in Ireland
There were student protests in Dublin. I was there last October, and saw one personally. The students were angry over tuition increases, or something like that.
Dec '10
Re: From Our Man in Ireland
Kenneth: I remember way back in about 2007 reading breathless stories about the economic miracle in Ireland (and in Iceland, too, by the way). The theme seemed to be that these two countries had leveraged their way to wealth via the real estate and financial sectors.
And then they just collapsed, overnight. When leverage unwinds, things come down fast and hard. · Feb 25 at 1:54pm
Edited on Feb 25 at 01:55 pm
Ireland became the "Celtic tiger" much earlier than that, starting in 1995 when it reduced its corporate tax rates. The changeover to the Euro started distortions in the Irish economy that moved growth out of industrial development and into housing price inflation. Interest rates fell in Ireland (and the other PIIGS countries - Portugal, Italy, Greece and Spain) and asset prices rose -- but Ireland could not realign its currency's value to reflect the changes in its economic conditions.
Oct '10
Re: From Our Man in Ireland
Stuart Creque
Ireland became the "Celtic tiger" much earlier than that, starting in 1995 when it reduced its corporate tax rates. The changeover to the Euro started distortions in the Irish economy that moved growth out of industrial development and into housing price inflation. Interest rates fell in Ireland (and the other PIIGS countries - Portugal, Italy, Greece and Spain) and asset prices rose -- but Ireland could not realign its currency's value to reflect the changes in its economic conditions. · Feb 25 at 2:59pm
Right, and very few nations have the political will to internally devalue, especially if they have an adversarial system for labor bargaining. Germany is a good example of a nation that did manage to internally devalue; businesses, labor groups, and the government deliberately engineered stagnant wages to lower labor costs.
Few nations can convince the public to accept lower real wages; floating exchange rates are used to force wage adjustments automatically. This happened here in the U.S., where we've also had stagnant wages--our current account (trade) problems puts downward pressure on median incomes.
Aug '10
Re: From Our Man in Ireland
Having come to terms with not being Ricochet's "Man in Ireland" (or one of them), I offer the following:the Left thought that this was the end of history, that Capitalism was a busted flush and the proletariat would rise up and fight for higher taxes and social spending.But like Wisconsin, it turns out that as well as having great cheese and beer, we have a beating conservative heart.My centre-rightish party is going to get a kicking but so is the Left.If they can't do it now, they'll never do it.
Nov '10
Re: From Our Man in Ireland
As another Emerald Isle inhabitant, I'm still smarting from realizing the huge missed opportunity of not dubbing myself Rick 'O Shea.
Another explanation for why the Irish have generally resigned themselves to swallowing their bitter pill of debt is this: they are not so much spontaneously embracing collective responsibility now as attempting to atone for their collective irresponsibility earlier.
I say "collective" because, although the conventional wisdom pins the blame for the economic bust exclusively on corrupt and malfunctioning institutions, the phony boom that preceded it relied upon the complicity of a multitude of economic actors. The many, not the few, had to be simultaneously ignorant enough to believe that property values would climb forever, improvident enough to borrow and spend on that assumption, and indolent enough to believe that no effort was required to prosper. Sure, easy credit acted like the financial equivalent of crack-cocaine, wreaking havoc far and wide; but no drug dealer could prosper without some willing junkies to supply.
See the always insightful and eloquent Anthony Daniels on the subject:
http://www.ionainstitute.ie/assets/files/Anthony%20Daniels%20talk.pdf