Ireland was the darling of capitalists, the "Celtic Tiger", a nation with low taxes, and an educated work force speaking a brand of English that we can understand. Low corporate taxes, and not much bank regulation either. Now it has gone all sour, and rather than the banks and investors taking the hit, most of it has been handed to the taxpayers (those have have not left the country).
Ireland has treated their citizens just about exactly as Republicans George Bush and John Boehner have done, or proposed, for U,S. citizens and the result has been a disaster compounded. The banks and investors have been bailed out (just as Bush bailed out the banks and AIG),and public benefits have been cut, along with wages, including the minimum wage, with no stimulus package, all as Boehner has proposed is what we should have done.
The results show why we do not want to follow the Irish model, and why the stimulus, barely 3% of gross domestic product, has not done as much as we hoped, but stopping the loss of jobs improved our situation in 2009, but did not create a climate that makes people want to hire anyone. Right now consumers want to wait and see if things get better, especially job security. Ireland spent less (no stimulus), made huge cuts in spending and the economy has spiraled down.
Ireland has a very low corporate tax rate,part of a "beggar thy neighbor" plan that has worked, attracting U.S. businesses like Pfizer and Google to move jobs that might,should, have been in the USA, or even Germany (larger markets), but the firms avoided taxes by moving operations to Ireland. The low tax rates deny Ireland much income that could help them now, but instead of raising the corporate rates, they have pounded public workers, cut services, and raised the tax rates on their own citizens.
Read article on Irish corporate taxesThe result, as Paul Krugman predicted months ago, has been more layoffs, and lower tax revenue as people worried about their jobs cut back on spending.Krugman "Eating the Irish" (for the record, my blog quoting Jonathan Swift appeared five days before Krugman chose a similar from the same author. I am not sure if a third party triggered both of us, but,if so, I don't know who it was. The logic of all who refer to this "Modest Proposal"is the same, that the poor pay the costs of the failures of the rich, but never share in the profits).
http://topics.nytimes.com/top/news/international/countriesandterritories/ireland
The banking disaster has been huge in Ireland, but by putting the costs of failure on the public, assuming private debt for the taxpayer to pay, has led many of Ireland's young people to leave the country, those that have stayed to contemplate leaving, and their parents to wonder how the "Celtic Tiger" could die so quickly, and they get the burial fees.
Ireland
Updated: Nov. 23, 2010
Overview
The economic collapse forced the country to cut public spending and raise taxes, the type of austerity measures that financial markets are now pressing on most advanced industrial nations.
Rather than being rewarded for its actions, though, Ireland has been penalized. Its downturn has been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent in 2009 and remains in recession. Joblessness, which had more than doubled, remained above 13 percent, and housing prices fell by a quarter.
In November the government conceded that it had miscalculated the scale of its debt challenge and announced an additional 15 billion euros in savings over four years, bringing the total sum of tax increases and spending cuts to about 30 percent of Ireland’s total economic output. Investors responded by driving up interest rates on Irish government bonds.
No comments:
Post a Comment