Almost every country in the world was badly affected by the 2008 ‘Credit Crunch’, but some more than others. In the case of Ireland the impact was more noticeable because of the huge economic boom the country had undergone from the late 1990s to very recently. The term ‘Celtic Tiger’ had been specifically coined to describe this success story.
In retrospect the Irish economy was a straw house waiting to collapse at the first really bad storm. Greece, Portugal, Spain and to a lesser extent Britain found themselves in a very similar situation. The political impact in Ireland was significant with the collapse of the government and a huge amount of anger directed at the politicians who had been telling the public for the past twenty years that everything was ok.
As always with these kind of things, no one wanted to believe it could ever end, so politician after politician went on the news to assure the public that it wouldn’t. Equally, several books were written discussing why the boom had happened and what lessons the rest of the world could learn from it. Take for example Paul Sweeney’s 2008 book ‘Ireland’s Economic Success: Reasons and Lessons’. In it he interviews several academics and politicians to try to explain Ireland’s continued good fortune. Having read the book I noticed that no one seemed terribly keen to point out that an unsustainable property boom, unchecked corruption and reckless levels of public borrowing played a vital role.
When discussing the issue of whether the boom is sustainable Sweeney is on safer ground, writing that, ‘Ireland has a very good chance of maintaining its high living standards, relatively low unemployment and strong public finances, if it pursues reasonable economic policies and of course, if there is not a major shock in the big, bad world’. Well obviously the Credit Crunch was that shock, but there is no getting away from the fact that it affected Ireland much worse than many other countries, because the economic miracle of the 80s and 90s had been built on weak foundations. The more you deregulate an economy to allow money to flow in, the easier it is for money to flow out when things go wrong.
It’s interesting to note that Paul Sweeney had written books on Ireland’s economic success before, one of them coming out in 1997. In the 2008 book he looks back on this in the preface and admits, ‘when it was being launched in December, I was terrified that the boom might not last and I’d look like a fool!’ Well the boom did last that time but here he wasn’t so lucky.
Many authors wrote similar books that predicted Ireland’s continued economic success for years to come, and I could fill a small library with quotes from over-optimistic politicians. Former Irish leader Bertie Ahern, until very recently was making lots of money as an after dinner speaker giving a lecture called ‘The Celtic Tiger: the Irish Model of Development’. Various papers have reported that he was asked to stop giving it in 2009 as the full-scale of the economic crisis became clear.