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  • The Celtic Tiger Is Not Extinct

    Ireland’s general election last Friday demonstrated, among other things, that Irish voters have been frustrated by the partial takeover of the country’s economic sovereignty by the European Union and the International Monetary Fund, and by calls to unwind some of the positive economic reforms of the past. Rejecting a major change of course, the Irish people, anxious to get their Celtic tiger back on its feet, gave a surprising (to outsiders) election victory to the party (Fine Gael) that campaigned on a platform of low taxes, pro-business regulations, and a renegotiation of the existing bailout deal with the EU and the IMF.

    In fact, the Irish economy remains well-equipped for recovery with sound economic institutions and a high level of economic flexibility and openness. Unlike other euro-zone economies such as Greece and Portugal, where economic freedoms are feeble, the Irish economy, as the Economist magazine recently pointed out, is regaining competitiveness by reducing unit labor costs, and exports are booming. The workforce is well-educated and entrepreneurial, and according to a recent study by a special division of the Financial Times, in 2010 Ireland was the second most favored foreign direct investment destination globally, with the number of projects coming to the country increasing by an astounding 15 percent.

    Those who wrote off Ireland’s chances for a rapid recovery from its current difficulties are repeating an error that occurs every time there is a hiccup in a market economy. For example, the Asian tigers, newly industrialized economies such as South Korea and Taiwan, faced a financial crisis in 1997. At the time, the popular interpretation was that that economic crisis debunked the “Asian Miracle.” Capitalism and globalization were repudiated and blamed for the bursting of currency and property bubbles and the subsequent difficulties of Asian emerging economies. Yet the years following have proven that interpretation wrong. The Asian tigers have bounced back strongly.

    By the same token, Ireland appears ready to regain its lost economic momentum. Don’t be surprised when the Celtic tiger makes a roaring return.

    Posted in International [slideshow_deploy]

    3 Responses to The Celtic Tiger Is Not Extinct

    1. Kevin H, college par says:

      The tiger has been dead for nearly 5 years and is a prime example of how extreme conservative economic policy simply doesn't work. Year after year, conservative economists would point to Ireland is example of their policies – espcially the low corporate tax and look where ti ended up.

      Ireland now has the highest level of household debt relative to disposable income in the developed world at 190%.

      Ireland was first EU country to enter into recession and its credit rating continues to be downgraded.

      If it wasn't for companies like Danske Bank and help from the EU, Ireland woudl be hurting even worse.

      We need to face reality and learn from history – we've seen what conservative policies did to Ireland, and what it's done to Texas (another beacon of conservative economic theory that has failed miserably) and we've seen what conservative policies have done to the US. They have done terribly economically compared to progressive policies. There simply is no comparison.

    2. s. morris - north da says:

      Kevin H. has overlooked an important culprit in the failure of the Irish economy – the same one which has been at work destroying America's – irresponsible lending. In the U.S. it was mandated and resulted in defaults up the wazoo. This is the policy that can never work. It is based upon a "spread the wealth" misconcept where those who do not have reasonable prospects of repaying loans are able to demand that the loans be made anyway. And there are always corrupt government officials behind the curtain. A sound and robust economy will result in REASONABLE LENDING RISKS. When we depart from what is reasonable and consistent with sound financial practice – that is responsible lending, low taxes, minimal regulation of business, some restraint on labor, we will suffer serious economic crisis. And going to the other members of the world community, whether that is the EU or the IMF or China or whomever, will result in loss of national sovereignty and economic slavery. Ireland suffered too many centuries of foreign domination to have allowed this to happen, the loss of its national sovereignty through subsumation by the EU. Let us all hope that the new government will lead Ireland on a more independent path.

    3. Pingback: Celtic tiger | Mndenterprise

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