In Question Time yesterday, Bill English said Ireland is an example of how bad the recession might have gone in New Zealand. That triggered a memory of John Key three years ago saying we should follow the Irish economic model. I guess we can just be thankful Key wasn’t in power at the time to put that crazy ‘aspiration’ in effect.
Here’s the ‘Key Notes’ from October 2007, where Key says we should adopt Ireland’s economic reforms:
I’m always struck by the similarities between New Zealand and Ireland. We are the same size in terms of population, and we are both green, hilly, and have strong agricultural economies.
There are differences too. Ireland is also more prosperous than New Zealand. That hasn’t always been the case. Just fifteen years ago, the Irish and New Zealand economies were on a par. We were both poor performers compared to other developed countries.
Nothing much has changed in New Zealand. But Ireland has gone from being one of the poorest countries in Europe to being one of the wealthiest. It’s done this by adopting policies that encourage business growth, improve the skills of its young people, and entice Irish people all over the world to return home to live and work.
The lesson from Ireland is that countries can turn themselves around if they are determined enough. It’s a lesson New Zealand would do well to learn.
In case you’re wondering, the Irish model that Key is crediting with its apparent economic success is a strain of neoliberalism just as virulent as ours, if not more so, with an additional element of corruption.
Of course, the real reason for Ireland’s growing prosperity was, initially membership of the EU and the huge net payments it got from the EU infrastructure and agricultural budgets. After decades of poverty, the EU was helping Ireland to catch up.
Then, things went nuts. Among its neoliberal reforms, Ireland set up an ‘International Financial Services Centre’, basically a Wild West for financiers were Irish tax rules didn’t apply. The jobs and cash flowing in caused a huge property bubble. Everyone had jobs, everyone felt rich and could get even richer selling houses to each other. (sound familiar? Ireland was worse)
And then it all went to shit. The global financial system nearly collapsed, the finance jobs disappeared, the housing bubble burst, the economy went into steep decline. The recklessly over-extended Irish banks, which were riddled with corruption, went to the government for bail-outs. To pay for the bail-outs and constrain its own deficits, the government slashed spending sending many more on to the dole queue and gutting public services. Even that wasn’t enough to make investors confident enough to buy its debt and, now, it has had to go to the EU for its own bailout.
As Bill English said in the House yesterday “We have only to see the experience of Ireland, which has essentially gone broke, to see just how bad things could have been.”
Remember, that’s how bad things could have been if English, Key, and Brash had had time to put their extreme rightwing plans into effect before the crisis.