Why Are Ireland And The Rest of Europe Still Worse Off Than The U.S.?

Terrance Heath

In 2010, the Heritage Foundation ranked Ireland in the top 10 counties in its “Economic Independence Index.” Four years later, conservative austerity has wrecked Ireland’s economy and other European economies.

The “luck of the Irish” ran out in 2008, when the “Celtic Tiger” was neutered by the “sharp economic adjustments” that were bursting bubble-driven economies around the globe. Ireland became the first European country to enter a recession in 25 years. Like the U.S., Ireland’s economy was driven by a surge in housing and credit-based consumer spending. Besides housing, Ireland’s economy relied on exports made by foreign-owned multinationals, drawn to the Emerald Isle by one of the lowest corporate tax rates in Europe.

Lately, Ireland has been touted an austerity “success story”; calling its “recovery” proof that the pain of austerity will pay off in the end. But Irish columnist Fintan O’Toole calls it all “blarney.”  For most of the Irish, O’Toole writes, Ireland’ success story “feels less like ‘The Shawshank Redemption’ and more like ‘Rocky.'” The Irish haven’t been “joyously liberated,” he writes, “We’ve just withstood a lot of blows. We’re still standing, but we’ve taken so many punches that it’s hard to see straight.”

Conservatives, O’Toole says, see Ireland as “the Tyra Banks of nations: a model country.” But a model of what, exactly?

Austerity is creating more unequal society in Ireland. From 1990 to 2009, Ireland made gradual progress in reducing income inequality. The sharp rise in inequality after the financial crisis, and the imposition of austerity measures, from 2009 to 2010 erased that progress. As a result, Ireland was rated as the eight most unequal country in the European Union. Today, Ireland has the sixth highest level of income inequality in the European Union.

Northern Ireland has been disproportionately affected by austerity’s draconian cuts. A recent OxFam study said that 22 percent of the population is now living in poverty; 25 percent of those working do not earn a livable wage. The lowest earners have lost more than 38 percent of their income as a direct result of austerity policies. Thousands are being pushed into poverty by Ireland’s austerity measures.

Convention Centre DublinGerman finance minister Wolfgang Schäube declared, “Ireland did what it had to do. And now everything is fine.” But only in the Ireland’s sector of the global economy, which is dominated by American high-tech companies, does Ireland’s economy look “fine.”

The domestic economy is another story. Beyond the glittering streets of Dublin’s docklands — with its “shiny European headquarter offices for Google, Twitter, Facebook and Yahoo,” and its fancy cafes and hotels —  property prices have fallen, and wages have plummeted. Unemployment remains at 12.8 percent.

The only reason unemployment hasn’t gone up is because of Ireland’s soaring emigration numbers. The Irish Independent estimated that 250 people leave Ireland every day in search of work and better opportunities. A report by the Dublin-based Economic and Social Research Institute estimated that 100,000 people — more than 2 percent of the population — would leave Ireland between April 2010 and April 2012.

Last year, Irish photographer David Monahan’s launched the Leaving Dublin project, with a blog post announcing his wish “to photograph to photograph people of all nationalities, who have made the decision to move from Ireland for economic reasons[:] in and around the city, juxtaposed with landscapes that are significant to their pasts.” Most of those leaving Ireland are young graduates, who cannot find work in their fields, and are leaving home and families to pursue their careers elsewhere.

The project is now an exhibit in Australia’s Immigration Museum, featuring the stories of nine Irish immigrants, reflecting on their experiences in Australia since being photographed by Monohan.

It’s not just Ireland. European immigrants fleeing austerity — and its consequences —  are flooding other European countries and causing those countries to rethink their welfare policies. (Immigrants from the 28-part European Union have the same welfare rights are native citizens in many countries.) The influx of “austerity refugees” is leading some countries to consider changing eligibility requirements for, or reducing the amount of certain benefits.

Europe’s economic “recovery” has been weak, even compared to our own anemic “recovery” in the U.S, Mark Weisbrot writes in The Guardian. The U.S. recession technically lasted about 18 months — from December 2007 to June 2009. (It hasn’t really ended for millions of unemployed Americans, of course.) Europe had a similar recession, but fell into a longer recession in 2011, from which it may be just starting to emerge.

That’s made a big difference in the lives of many Europeans. Eurozone unemployment is a near-record 12.1 percent, compared to 6.7 percent in the U.S. In Spain, unemployment is 26.7 percent, and youth unemployment is 57.4 percent. in Greece, unemployment is at 27.8 percent, and youth unemployment is 59.2 percent

The reason, Weisbrot writes, is that Europeans have been subjected to more brutal economic polices. The Federal Reserve used monetary policy to stimulate recovery. Even though de facto austerity has severely limited any economic “recovery” in the U.S., European leaders have adopted brutal economic policies that the majority of their citizens would never vote for.

Weisbrot writes that the so-called “troika” — the European Central Bank (ECB), the European Commission, and the International Monetary Fund (IMF) — which drives austerity policy in Europe, is even less accountable to EU citizens than the Fed and Congress are to most Americans. The “troika’s” recommendations to European leaders whose countries needed a bailout have been uniform: “reduce the size of government, reduce the bargaining power of labor, cut spending on pensions and healthcare, and increase labor supply.” And governments in countries like Greece and Ireland have complied, against the will of their own citizens.

Europe, Weisbrot says, is an example of what can happen when people lose control over their government’s economic policies.

All this is not to hold up the US recovery as an example; it is disgraceful that we have fewer people employed than we did six years ago, and a lower proportion of employed workers than we had at any time going back to the 1980s. It is also unnecessary: the media is filled with nonsense about cutting deficits and debt, and our government is also slowing growth with unnecessary budget cuts. And all this when our federal debt has a net interest burden of less than 1% of our national income, about as low as it has been in the era after the second world war. But the Eurozone experience shows how much worse it can be when people lose most of their control over their government’s most important economic policies.

The only reason Americans have not yet experienced austerity in its most brutal form is because we haven’t lost all control over our government’s economic policies. Not yet, anyway. But the deals coming out of Washington lately should remind us that we can’t afford to lose our tenuous grip on government, lest we fall into the abyss of austerity that is conservative economic policy.

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