Home > Banks and the Economy > Ireland’s narrow elite ran the economy like a casino and awarded itself free chips.

Ireland’s narrow elite ran the economy like a casino and awarded itself free chips.

Ireland has been betrayed by its leaders The need for a bailout is the consequence of the government’s incompetence. It should pay for its failure, Observer, Sunday 21st November

Not all of the boom was bogus. The initial expansion was driven by growth in exports. A young, well-educated, cheap labour force attracted investment. So did an aggressively competitive 12.5% corporate tax rate. Ireland positioned itself as a lean, buccaneering start-up economy, challenging Europe’s unwieldy giants. Membership of the single currency gave seamless access to export and capital markets.

But there was a shift at the start of the 21st century. As success fed into higher disposable incomes and demand for houses, the returns on property investment soared. The government, in turn, became dependent on tax revenues – and in some cases bribes – from the building trade. Politicians kept consumer demand buoyant with generous public spending, while rewarding developer friends with public works contracts. Ireland’s narrow elite ran the economy like a casino and awarded itself free chips. No one, save a few lonely economists, had much incentive to call time on the party. By 2007, around one in five Irish jobs depended in some way on the property market.
(full article)

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