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Ireland's Road To Ruin ... and Ours

By Terrance Heath, Campaign for American Progress | Op-Ed

The "Celtic Tiger" — the Irish economy — has clawed its way back from near extinction, according to the Heritage Foundation. The irony is that the things that Heritage praises about Ireland's economy are what drove it to the brink of extinction. The "Celtic Tiger" has been caged, de-clawed and neutered. And it was conservative economic policy that did it.

That's why Heritage keeps bringing it up. It's hard for conservatives to ignore Ireland, because Ireland was an example of the "success" of conservative economics. Until it wasn't.

It seems counter-intuitive that conservatives keep bringing it up, given that Ireland followed the same tax-cutting, deregulating conservative economic path to its misfortune that led America to its own. That Ireland stands as an example of austerity's epic failure, makes it even more mystifying that conservatives keep spotlighting the clearest example of the disastrous impact of conservative economic policy.

All of this would be reason enough for conservatives to avoid the topic of Ireland altogether. Instead, it's why they can't. Conservatives can't leave Ireland alone. They have to talk about it. They've got to wrap the Irish economic disaster in their narrative, before someone else gets a more reality based "frame" around the story.

Lately, conservatives mention Ireland for two reasons. They bring it up in order to praise the Irish economy, as Heritage did when it placed the country among the top 10 on its "Index of Economic Freedom" last year; or to "rehab" it, as they tried to do this week. Alternately, they reference Ireland to warn us that we're going to end up like Ireland if we don't choose austerity now. Rep. Paul Ryan's State of the Union response is one example:

"We still have time... but not much time. If we continue down our current path , we know what our future will be. Just take a look at what's happening to Greece, Ireland, the United Kingdom and other nations in Europe."

In conservative framing, Ireland represents both an ideal we should strive for, and omen we should heed. That framing omits one important element. What conservatives idealize about the Irish economy is also what's most ominous.

The story has been told too thoroughly and too well by others for me to try to do it here. So, I'll summarize. As in the U.S., the crisis in Ireland was created by a boom destined to go bust — complete with financial sector deregulation, irresponsible lending by banks, and a building boom that was really a bubble just waiting to burst. The conservative economic policy that Ireland followed led to an influx of corporate dollars, none of which were actually invested in Ireland itself.

Ireland, Paul Krugman noted, got into its current mess by traveling almost exactly the same economic path as the U.S. And it is where we could end up, if we stay on that path — which is what conservative policy would have us do; complete with further deregulating of already out-of-control banks, and inflicting harsh, job-killing spending cuts on the rest of the population. It hasn't been the recipe for recovery in Ireland and it won't be here.

That doesn't mean conservatives won't keep trying to follow Ireland's example. The job-killing cuts in GOP budget proposals, bear a close resemblance to the austerity measures that eliminated 25,000 public sector jobs in Ireland. Wisconsin Gov. Scott Walker's efforts to slash the wages of public employees, reducing some middle class families' annual income by $8,000 to $9,000, are a lot like the austerity measures that cut some Irish families' annual incomes as much as $5,600.

The conservative assertion that such measures will actually lower unemployment, raise revenues, and do everything but cure the common cold should be laughable by now. Economic outcomes in Ireland and the U.S. have debunked that bit of magical thinking. Everywhere but the Heritage Institute, that is. Austerity just means more people will be poorer, and will be likely to stay that way.

Austerity will not narrow budget deficits, because the austerity imposed in Ireland and proposed here is the job-killing variety. It's simple, really. Fewer people working means fewer people earning paychecks, which means fewer people paying taxes, which means less revenue. Austerity is just another word for revenue reduction — the logic of which is that one enhances one's ability to pay one's debts by reducing one's income. It's a vicious circle, the more you cut, the more you need to cut, because the more you cut the less you have coming in to pay your debts — which now look even biggercompared to your reduced income. So, you cut until there's little left to cut.

Nothing about the austerity imposed in Ireland and proposed in the U.S. is designed to be temporary, for it destroys foundations of the social contract, that might make economic comeback possible for working- and middle-class families: education, health care, etc.

Without investment these foundations will crumble, taking their benefits with them, and in the event of a economic rebound, far fewer will be able to take advantage of it and begin the climb back to something resembling their previous standard of living. Neither will their children or the grandchildren, as the advantages their grandparents passed down to their parents are lost to austerity.

There's one thing conservatives might legitimately find hopeful in Ireland. It's that the initial flare of protest seems to have morphed into resignation and acceptance of austerity that's likely to become the "new normal."

The Irish government's austerity policies did not inspire confidence or allay the "uncertainty" of investors and creditors. Instead of shrinking Ireland's deficit, austerity had the opposite effect. What Ezra Klein called "Two sentences about Ireland that scare me," should scare Americans targeted by the GOP's austerity measures.

At first, the vigour with which Dublin wielded the spending axe won plaudits from bond markets. But the deflationary impact of the cuts has since seen the deficit widen.

Austerity did not prove a recipe for recovery in Ireland. Conservatives say it will here, but haven't believably connected the dots. The Irish people started, at least, to connected the dots. As a result they voted out the government that imposed austerity, but still live with those austerity measures.

Americans are, perhaps, finally beginning to connect the dots and to see the GOP's "roadmap" for the road to ruin it has always been.. The question is: Is it soon enough?


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Ireland's Road To Ruin ... and Ours

By Terrance Heath, Campaign for American Progress | Op-Ed

The "Celtic Tiger" — the Irish economy — has clawed its way back from near extinction, according to the Heritage Foundation. The irony is that the things that Heritage praises about Ireland's economy are what drove it to the brink of extinction. The "Celtic Tiger" has been caged, de-clawed and neutered. And it was conservative economic policy that did it.

That's why Heritage keeps bringing it up. It's hard for conservatives to ignore Ireland, because Ireland was an example of the "success" of conservative economics. Until it wasn't.

It seems counter-intuitive that conservatives keep bringing it up, given that Ireland followed the same tax-cutting, deregulating conservative economic path to its misfortune that led America to its own. That Ireland stands as an example of austerity's epic failure, makes it even more mystifying that conservatives keep spotlighting the clearest example of the disastrous impact of conservative economic policy.

All of this would be reason enough for conservatives to avoid the topic of Ireland altogether. Instead, it's why they can't. Conservatives can't leave Ireland alone. They have to talk about it. They've got to wrap the Irish economic disaster in their narrative, before someone else gets a more reality based "frame" around the story.

Lately, conservatives mention Ireland for two reasons. They bring it up in order to praise the Irish economy, as Heritage did when it placed the country among the top 10 on its "Index of Economic Freedom" last year; or to "rehab" it, as they tried to do this week. Alternately, they reference Ireland to warn us that we're going to end up like Ireland if we don't choose austerity now. Rep. Paul Ryan's State of the Union response is one example:

"We still have time... but not much time. If we continue down our current path , we know what our future will be. Just take a look at what's happening to Greece, Ireland, the United Kingdom and other nations in Europe."

In conservative framing, Ireland represents both an ideal we should strive for, and omen we should heed. That framing omits one important element. What conservatives idealize about the Irish economy is also what's most ominous.

The story has been told too thoroughly and too well by others for me to try to do it here. So, I'll summarize. As in the U.S., the crisis in Ireland was created by a boom destined to go bust — complete with financial sector deregulation, irresponsible lending by banks, and a building boom that was really a bubble just waiting to burst. The conservative economic policy that Ireland followed led to an influx of corporate dollars, none of which were actually invested in Ireland itself.

Ireland, Paul Krugman noted, got into its current mess by traveling almost exactly the same economic path as the U.S. And it is where we could end up, if we stay on that path — which is what conservative policy would have us do; complete with further deregulating of already out-of-control banks, and inflicting harsh, job-killing spending cuts on the rest of the population. It hasn't been the recipe for recovery in Ireland and it won't be here.

That doesn't mean conservatives won't keep trying to follow Ireland's example. The job-killing cuts in GOP budget proposals, bear a close resemblance to the austerity measures that eliminated 25,000 public sector jobs in Ireland. Wisconsin Gov. Scott Walker's efforts to slash the wages of public employees, reducing some middle class families' annual income by $8,000 to $9,000, are a lot like the austerity measures that cut some Irish families' annual incomes as much as $5,600.

The conservative assertion that such measures will actually lower unemployment, raise revenues, and do everything but cure the common cold should be laughable by now. Economic outcomes in Ireland and the U.S. have debunked that bit of magical thinking. Everywhere but the Heritage Institute, that is. Austerity just means more people will be poorer, and will be likely to stay that way.

Austerity will not narrow budget deficits, because the austerity imposed in Ireland and proposed here is the job-killing variety. It's simple, really. Fewer people working means fewer people earning paychecks, which means fewer people paying taxes, which means less revenue. Austerity is just another word for revenue reduction — the logic of which is that one enhances one's ability to pay one's debts by reducing one's income. It's a vicious circle, the more you cut, the more you need to cut, because the more you cut the less you have coming in to pay your debts — which now look even biggercompared to your reduced income. So, you cut until there's little left to cut.

Nothing about the austerity imposed in Ireland and proposed in the U.S. is designed to be temporary, for it destroys foundations of the social contract, that might make economic comeback possible for working- and middle-class families: education, health care, etc.

Without investment these foundations will crumble, taking their benefits with them, and in the event of a economic rebound, far fewer will be able to take advantage of it and begin the climb back to something resembling their previous standard of living. Neither will their children or the grandchildren, as the advantages their grandparents passed down to their parents are lost to austerity.

There's one thing conservatives might legitimately find hopeful in Ireland. It's that the initial flare of protest seems to have morphed into resignation and acceptance of austerity that's likely to become the "new normal."

The Irish government's austerity policies did not inspire confidence or allay the "uncertainty" of investors and creditors. Instead of shrinking Ireland's deficit, austerity had the opposite effect. What Ezra Klein called "Two sentences about Ireland that scare me," should scare Americans targeted by the GOP's austerity measures.

At first, the vigour with which Dublin wielded the spending axe won plaudits from bond markets. But the deflationary impact of the cuts has since seen the deficit widen.

Austerity did not prove a recipe for recovery in Ireland. Conservatives say it will here, but haven't believably connected the dots. The Irish people started, at least, to connected the dots. As a result they voted out the government that imposed austerity, but still live with those austerity measures.

Americans are, perhaps, finally beginning to connect the dots and to see the GOP's "roadmap" for the road to ruin it has always been.. The question is: Is it soon enough?


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