Ship of Fools Read Free

and spend’
Democrats were wrong and Reaganism right. Benjamin Powell, on Fox News and in Cato Institute papers praised Ireland for its ‘radical course of slashing expenditures, abolishing agencies and toppling tax rates and regulations’. The Wall Street Journal /Heritage Foundation Index of Economic Freedom gave the little country regular pats on the head as ‘Europe’s shining star’. Heritage Foundation authors pinned their most coveted medals to the tail of the Celtic Tiger. It was the embodiment of ‘Thatcherism triumphant’. Its ‘Reagan-style tax rate reductions’ had taught the world the lesson that ‘tax cuts are a recipe for prosperity’. By 2004, there were suggestions that the Irish story held a lesson, not just for the underdeveloped countries of eastern Europe or Latin America, but even for the US itself. Daniel Mitchell of the Heritage Foundation suggested that ‘the United States should learn a lesson from Ireland, which has turned itself from the “sick man of Europe” into the “Celtic Tiger” by slashing the corporate tax burden’.
    The crowning glory of this interpretation of the ‘Irish model’ arrived precisely at the moment when that model was tripping over its high heels and falling off the catwalk. For centuries, the Irish had dreamed of being like Americans - an ambition that millions of them fulfilled in the flesh. Then, in one of history’s weirdest reversals, there was a moment when some Americans with a serious prospect of power began to dream of being more like Ireland. Not as in wearing Aran sweaters, drinking pints of Guinness and waxing lyrical in a charming brogue, but in real, serious economic terms.
    In April 2008, Phil Gramm, the former Republican senator and economics advisor to presidential candidate John McCain, told US News and World Report that ‘The only place socialism is seriously debated in the world is in Washington,
DC . . . Ireland is a perfect example. Senator McCain’s people immigrated from Ireland along with millions of others because they were hungry. Today, Ireland has among the lowest tax rates in the world, one of the best business climates in the world, and as a result they have overtaken Americans in per capita income’.
    In September, McCain himself picked up the theme in one of his televised presidential campaign debates with Barack Obama: ‘Right now, the United States of American business pays the second-highest business taxes in the world, 35 per cent. Ireland pays 11 per cent. Now, if you’re a business person, and you can locate any place in the world, then, obviously, if you go to the country where it’s 11 per cent tax versus 35 per cent, you’re going to be able to create jobs, increase your business, make more investment, et cetera’.
    McCain got the figures wrong (the corporation tax rate in Ireland is 12.5 per cent) and his timing was rotten: even as he spoke the Irish banking system was frantically trying to hide the scale of the bad loans to property developers that rendered it effectively insolvent. But in citing Ireland as the model that his presidency would follow, he was putting the final seal on the idea that this previously benighted island offered empirical proof that the way forward for everyone was extreme economic globalisation, low personal and corporate taxes, ‘business-friendly’ government and light regulation. The Irish formula was the new universal truth of economics, society and development. It transcended history and geography and, as the Uruguayans had been told, it worked ‘irrespective of time and place’.
    It had, indeed, defied geography by inserting the American way of doing business into Europe. Even sceptical Europeans began to believe this: in May 2008, an extensive article
in Le Monde hailed Ireland as ‘un “american dream” à l’européenne’.
    The problem with this