The appallingly bad luck of the Irish

Posted on: 17 November 2010 by Alexander Hay

Ireland's economic crisis reveals much about us and the future of the Euro.

Ah, the Irish. Amongst the most stereotyped people in the world. Leprechauns, shamrocks, harps, that bloke with the moustache in Ulysses, overpriced studio flats in Dublin, and so on. They are also now in deep trouble as the country may soon be forced to relent and be bailed out financially by the EU.

The indignity of passing the begging bowl aside, this also means a symbolic loss of self-determination. Charity degrades, as Irishman Oscar Wilde noted, and Ireland may not recover from such a blow to its national pride. As we all should know, the bail-out of the UK in 1976 by the IMF continues to scar our psyche.

But let us not forget that this bail out is self-inflicted. The Celtic Tiger was more like a Cork tabbycat high on its own ebullience. Too much was invested in a property bubble that burst, taking with it a huge construction sector and so much of the tax receipts the Irish state and its public services had come to rely on.

The wealth didn't trickle down through Irish society either - national poverty rates remained stubbornly high even during the boom and worse, too much was invested, so to speak, in the financial services sector as the chief breadwinner for the economy.

Sound familiar yet? This is where we need to pay attention, as the above paragraph could yet still apply to us too. Like the Irish, we depend on overpriced property, expensive money and not a small amount of self-delusion to keep the country afloat.

Moreover, wealth in the UK doesn't trickle down so much as stagnate and go a funny yellow colour after a few days. And like the Irish, we rely too much on staples, indeed - exactly the same staples. Any History undergraduate will be able to tell you that the UK's industrial decline began when it started to rely on the four same-old blinkered industries of shipping, coal, textiles and steel, while everyone else expanded into new areas.

History students in 2060 will no doubt add that it was an obsession with spiverry in the form of finance and property price inflation that did us in during the first decade of the 21st century. We may yet be in the Irish stew ourselves soon enough.

What does this say about the EU and its great white hope, the Euro? Again, there is no crock of gold at the end of the fiscal rainbow. The Euro's main weakness is that it is one currency for many, many different economies and cultures.

True, your Euro lets you do business in Frankfurt and Helsinki, but it also leaves you vulnerable to delinquent economies like Greece and Spain, both of whom - without a shred of shame - demanded the Irish give in to EU aid in case the ensuing mayhem did for their own basket case economies too.

There are already rumblings of discontent in Germany (aka the bit of the Eurozone that makes money) about having to carry the losers down in the Med - and even Britain may have to pay £10 billion to help the Irish bail out. Much as we have bet the farm on the financial sector, so the EU has invested everything – money, politics, ideology - into the Euro. It may yet be approaching its final crisis as a result.

Where do the Irish go from here? It is telling that they had student riots a few months before we did - a nation that cannot afford to educate its future thinkers, innovators and makers is in long-term decline.

But if they are afflicted, so are we; and looking over the Irish sea can at times be like looking into a mirror that shows us what could have been and may yet still come to be. Cross your fingers and kiss your rabbit's foot that we do not share in the luck of the Irish.

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Alexander Hay

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