Ship of Fools Read Free Page B

least as hard as they played.
    Yet the very speed of the transformation contained its own problems. There was little time to absorb what had happened, to weigh it and understand it. How much of it was about Ireland and how much a mere side-effect of a global boom? How much was due to good policy decisions and how much was sheer dumb luck? It was easier to adopt a simple explanation that had the virtue of chiming with what the rest of the world (and especially those in the US who championed an extreme version of the dominant free-market ideology) wanted Ireland to prove.
    A narrative emerged. Fianna Fáil and the small, radically neo-liberal Progressive Democrats came to power in 1997, with the PDs (supported by the Fianna Fáil Minister for Finance, Charlie McCreevy) pulling the centre of gravity of Irish governance sharply to the right. Income taxes were cut, foreign companies were courted with massive tax breaks and the promise of light regulation. Enterprise was encouraged and rewarded (or, in plainer words, the rich were idolised and allowed to avoid petty restrictions like paying tax). The power of free-market globalisation was unleashed and Ireland became a large-scale version of a TV makeover show, with the ‘before’ pictures showing a slovenly, depressed
wretch and the ‘after’ images a smiling, bling-bedecked beauty, who went on to start her own self-improvement course for similarly abject little countries.
    It was a good story, and like most good stories, it was mostly untrue. The reality is that far from being a model that could be applied ‘irrespective of time and place’, the Celtic Tiger was the product of a very specific place at a very particular time. A lot of things came together in Ireland in the mid-1990s, and not many of them had much to do with the application of free-market Reaganite orthodoxy.
    For a start, one of the reasons the Irish economy grew so fast after 1995 is that it had grown so slowly before that. The performance of the Irish economy since independence in 1922, and especially during the post-war boom that transformed the rest of Western Europe in the 1950s, was utterly miserable. Cormac O Grada and Kevin O’Rourke noted of Irish economic performance from the end of the Second World War until 1988 that the country was a ‘dramatic underperformer during this period’, a ‘spectacular outlier’ and ‘the sick man of Europe’. As the historian Joe Lee noted in 1989, ‘No other European country, east or west, north or south, for which remotely reliable evidence exists, had recorded so slow a rate of growth of national income in the twentieth century’. Much of what happened in the 1990s was simply that Ireland caught up with the living standards of the region it belongs to - Western Europe - and got to where it should have been all along. The energy unleashed by the process of catching up, combined with the advantages of not having an old heavy industrial base, allowed Ireland (temporarily) to outperform those European neighbours. In a longer perspective, all that was happening was a regional levelling-out.
    A second factor was the long global boom of the 1990s.
The growth in world economic output between 1995 and 1998 exceeded that during the entire 10,000 year period from the dawn of agriculture to the start of the twentieth century. The growth of the world economy in 1997 alone far exceeded what was achieved during the entire seventeenth century. As part of this trade-fuelled boom, American companies invested more money abroad in the 1990s than in the entire previous four decades. Half of their investment of $750 billion went to Europe. It is not a wonder that a small but significant slice was invested in Ireland, a stable, Anglo-phone country with EU membership, relatively low wages and a well-educated workforce. It would, in fact, have been truly amazing if this had not happened. To put it another way, if Ireland hadn’t