2001 economic consensus paved road to economic ruination

Dan McLaughlin wanted old target rates for income tax of 40% and 20% replaced with new medium term targets of 30% and 10% respectively in the 2001 Budget and Ahern, McCreevy, IBEC, ICTU and the people (70% according to an Irish Times MRBI poll) gave the European Commission’s reprimand about an expansionary budget the two fingers.

"There’s no monetary policy prescription for the problems of the Irish economy,‘’ Maurice O’Connell, governor of the Central Bank of Ireland, told BusinessWeek magazine in 2000.

Why are Spanish banks not in intensive care even though the central bank was subject to the same eurozone rules in an economy that experienced a property boom?

finfacts.ie/irishfinancenews … 6709.shtml

An excellent article.

I hear politicians say that the Irish people became over-confident and got a bit above themselves in rejecting Lisbon. Pro-Lisbon (anti-Maastricht, anti-Nice) as I am, I hate that condescending faux-analysis that insults the intelligence of the Irish people.

Having read your article it occurs to me that the reason the politicians think the people became over confident and got above their station is because the politicians (aided by the media, and particularly the Independent) led them in the charge some time ago. It is the classic psychological behaviour of projecting your own thoughts onto others.

Having read about the Spanish banks and their banking crash in the 1980s and having read JK Galbraith’s “The Great Crash of 1929” it seems to me that the only thing that could have saved us from the massive crash of 2008-2009 was experience of a previous crash in our life time. Even when we saw it coming in 2007 we did not understand it.

It will be this memory which wil protect us for some time to come. But, providing the human race survives the century, it will happen again. Let’s hope we can avoid war without having experienced it in our life-time.

I’d put it differently.

The irish people did get over-confident and above themselves, not just over Lisbon, but they were certainly helped along the wayby the shameless boasting of the political classes and the unquestioning drivel in the media.

We surely did get a bit over-confident and had too high an opinion of ourselves.

However that not a satisfactory analysis of why we rejected Lisbon. The necessary corrollary is that a fearful Irish people tugging the forelock is better than a confident Irish people questioning the democratic future of their country and of Europe. It also absolves the political parties and the EU for failing to have a message which could be delivered and failing to deliver it as well as can be. Money grubbing is not the way to plan for a hundred year long political union.

With that said, I am in favour of Lisbon because of the increases in transparency, democracy and accountability which it brings.

Actually, i’d say it accounted for a lot. At the time, ireland was the rising power of europe (it was a tiger, as we all knew, like those asian countries), no longer the poor backwater island, and we didn’t want to get overly tied to those stagnant continental countries.

The messages on both sides were simplistic - “Trust us, vote Yes” vs “Doing well, don’t change, Vote No” on the other.

“A fearful irish people” have been certainly more likely to be pro-europe than the “(over-)confident irish” were. You can put it down to any number of factors, but lisbon, no matter how you spin it, wasn’t all that massive, relative to previous treaties. You can’t easily escape the idea that the the mood of the people mattered at least as much as the actual question asked.

True - but there really isn’t any provable simple message to sell this time, No “6bn euro” etc.

Excellent article, as usual, Michael.
It is important that McCreevy and our economic commentariat do not succeed in re-writing their shameful part in our history.
Keep it up!

I don’t think they’re even too bothered about rewriting stuff from 8/9 years ago.

Right now they’re rewriting stuff from 8/9 weeks ago.
Not to mentioned Clowen’s new attempt to get “things he was going to do, but didn’t” admitted as evidence
in the court of public opinion.

Keep notes people. There’s a lot of stuff going on that won’t be in your kids or grandkids history books.

-Rd

Oh dear, we are touchy today!

Michael, are you a trained economist yourself?

I became an accountant after getting an M.Econ.SC degree at UCC, as jobs writing client newsletters in banks were scarce.

I may be less of an economist than PR man/economic “guru” Austin Hughes for example but 18 years of experience in industry is a useful addition to knowledge about issues such as elasticity!