Ireland has had the lowest corporate tax in the world, and an even more free market then the United States. Yet, their form of Capitalism has really WRECKED their economy in this recession and they also have a history of horrific famine, poverty, and decline.
Ireland’s ‘Free Market’ is part of why the are in such a horrible mess. They had almost no regulation whatsoever, so the economy failed hard from several bad investments that didn’t have any oversight.
You got your dates slightly mixed up ? Ireland’s allegedly pro-market reforms are less than 20 years old whereas the famines occurred in the 19th century.
But never let facts get in the way of clueless propaganda.
Problem with Ireland? Threefold.
First cheap money generating malinvestment, and lots of it.
Second, it failed to develop a varied economy. Very little manufacturing base, pretty much the growth was all carried by the financial services sector selling thin air.
Thirdly, it suffered from a deadly combination of the aforementioned cheap credit and being a relatively deregulated EU country. This meant entities from other European countries swarmed to Ireland with no other intention than paying less taxes. They had no interest in developing a solid and lasting presence there, just to stay on board as long as the going was good. As soon as the financial sector started to tank in (and believe we haven’t seen the end of it yet) they simply abandoned ship.
Spain is in a very similar situation, the main difference being their boom was driven by the housing business. As soon as Britons and Germans had less money available to buy vacation houses in Costa Brava local governments hiked property taxes to be able to keep up the present level of spending. This in turn scared away many more foreigners than the original crisis and led to a catastrophic burst. Now Spain has thousands of unsold vacation houses the locals don’t want or simply cannot afford to buy, they spoiled the atmosphere foreigners loved so much with seas of concrete and unemployment is already 18% and rising. Nothing new under the Sun here.
So then deregulation caused their crisis too. Go Capitalism, really is a successful system eh?
Sorry, you are confusing free-markets with mercantilism. Ireland doesn’t have a free-market. No country on earth does. There are no unregulated economies out there, so different crises are triggered by different changes in regulation. But really, go ahead and knock down your strawman…
You’re an idiot and Ireland had and has regulation.
If you’re going to resort to one-liners, here’s one from me: You’re banned. Go waste someone else’s time.
As an Irish citizen I feel I could shed some light on this. Firstly, Ireland has been falsely characterised as an example of a free enterprise economy. Ireland has more regulation and a lower economic freedom score than the USA. It is still a mixed economy. Rather Ireland is a demonstration of how a movement towards liberalisation breeds success. Incomes and generally standard of living have increased exponentially since taxes were slashed (both corporate and income) and industry was deregulated in the early 1990s. Ireland was transformed from a sleepy managed economy with an overbearing welfare state into a hypergrowth success story. This was partly a product of a right-wing party , which served as a minority partner in government. This party was recently annihilated in a general election, signalling a shifting of the political consensus to the left. This alone could be responsible for a shattering of confidence in Ireland’s future prospects.
Ireland’s economy, though liberal by world standards, is far from being free of government intereference. Big industry is tightly regulated, while railroads, roads, energy, health and transport are largely under government control. This, of course, diminishes the efficiency of these sectors. The impact of this state involvement was masked by commendable improvements in the “ease of doing business” and a reduction of corporate tax to 12.5% and the top income tax rate to 41%. Banking and services sectors remained minimally regulated, attracting Google, Facebook, Daemonware, Merril Lynch etc. to create a significant presence here. High-end manufacturing also flocked to Ireland, but for much less salubrious reasons- to avail of generous subsidies and guarantees. Demographic, cultural, geographic, educational, geo-political and language reasons also played a pivotal role but that’s not relevant to this discussion.
Ireland became one of the top 5 wealthiest countries, surpassing the US in nominal (but not PPP) terms as regards to GDP per capita. The GINI score was moderate and certainly, despite the rapidity of the boom, society did not become more unequal. Quality of life was ranked as the world’s best by the Economist and immigration soared.
Then things started to take a turn for the worse. The ECB, which controls Irish and EMU monetary policy, kept interest rates excessively low in the contect of the Irish economic climate. France, Germany and Italy, the 3 lumbering socialized giants, probably required rates of c. 2% to stimulate any semblance of economic activity. Unfortunately, Ireland became awash with cheap money which kickstarted a phenomenal and patently unsustainable housing boom. Average house prices reached €300000 before the collapse of demand in 2008. Clearly, the housing euphoria and the concomitant construction boom were a direct product of the unsuitable actions of the ECB.
Irish export industries have remained relatively stable due to buoyant demand in the Pharmaceutical industry, but of course the financial and construction sectors have evaporated. Ireland is not the basket case everyone is painting it to be. Debt to GDP is low and the state possesses disposable public assets. Irish people are still well paid and veritably rich in comparison to Britain or France. Unemployment is rising due to minimum wage and regualtion induced price stickiness. However, the Irish labour market is flexible, lightly unionized and has the benefit of having a very low tax wedge, which ensures retention of competitiveness.
It is not the Irish economy, but the Irish government, which is in serious trouble. Projected deficits are €20 billion on expenditure of roughly €60 billion, but this includes bank bailouts. Taxes are being hiked to close the deficit but most of the reduction will come from spending cuts. Austrians should at least be pleased by this. The welfare state in Ireland is ludicrous. Unemployment benefit is €205 per week (no questions asked) or obligations) This a powerful disincentive to work.
Ireland, far from being a shining light of free-market Capitalism, has one of the most extensive welfare states on the planet. Do not confuse low taxes and financial engineering with laissez-faire.
Absurd. The famines in Ireland resorted from unprecedented governemnt intereference. The British government controlled allocation of food. It exported food, and consequently drove prices higher in Ireland, whilst millions starved. If ever there was an indictment of government intervention that’s it.
Irish business is excessively regulated. We have had a centre-left government in perpetuity here and we also have the added of fastidious EU rules. You are atypical collectivist spouting uninformed nonsense
Banning people for expressing unpalatable views. That seems at odds with the spirit of Austrain economics
Seems like he was banned for misbehavior.
And what was his misbehaviour? Surely being a clueless sheep is not a crime on this forum?
But being a not-so-very-nice one is; there are nice ways of phrasing what he said.
“So then deregulation caused their crisis too. Go Capitalism, really is a successful system eh?”
Are you referring to that? ^
So much for how Ron Paul referred to Ireland in “The Revolution”, looks like even HE was wrong about that.
Ron Paul may have been referring to the positive effects of tax reform and deregulation and not lauding the Irish system as a whole. Do you have a link to the context?
Taken from Page 100 of the book. (I own it)
“On the other hand, the economic success stories of the past half century have arisen not from foreign aid but out of extraordinary workings of the free market, the great engine of well-being that everyone is taught to hate. I would choose freedom even if it meant less prosperity, but thankfully I don’t have a choice. Look at the countries that have risen from poverty to affluence and you will find places where economic freedom has a fighting chance, and contracts and property are respected. Look at Botswana, which has one of the freest economies - and among the most prosperous people - on the african continent. In South America, look at Chile, who’s people enjoy a standard of living of which most peoples elsewhere on the continent can only dream. Look at the economic miracle in Ireland, or the fantastic growth rate in Estonia.”
“miracle” is a hell of a subjective word. Ireland has come from starving to death 100 years ago to being one of the richest countries in the world
Not sure if its a magical capitalist fairy land though.
That is unobjectionable. He clearly states “where economic freedom has a fighting chance, and contracts and property are respected”. Economic freedom in Ireland is relatively high. The British legacy Common Law in Ireland enshrines property rights and contract enforcement. Ron Paul didn’t suggest that Ireland’s record on managing monetary policy or limiting government size and scope is particularly stellar. These latter problems are the source of Ireland’s fall from grace, undermining the free-market elements of the economy that Ron Paul would praise
Also, my damn Government teacher in high school said that same thing to me all the time. He made anti-free market statements all the time when he was teaching the class, especially when we were being taught about the cause of the economic crisis.