Ireland’s Model Crisis
Ireland has now left the clutches of the bailout-for-austerity framework created by the Troika (the European Commission, the ECB, and the IMF) for indebted eurozone countries. But the the monetary union's other distressed countries cannot replicate Ireland's success – nor should they want to.
DUBLIN – Ireland has now left the clutches of the bailout-for-austerity framework established by the Troika (the European Commission, the European Central Bank, and the International Monetary Fund) for indebted eurozone countries, and is leading the monetary union’s economic recovery. European policymakers, including Jean-Claude Trichet, the ECB’s former president, have suggested that Ireland’s dogged commitment to austerity is a model for others.
Really? It was not long ago that Ireland’s economic miracle was also seen as a model – what the Economist in 1997 hailed as “Europe’s shining light” – attracting admirers as diverse and distant as China and Israel. Then, Ireland became a model for how not to manage a property bubble and, subsequently, a banking crisis. Although exiting the Troika program is undoubtedly a success, especially when compared with the country’s wretched outlook in late 2010, no one should aspire to what Ireland has been through.
Most Irish citizens would also reject the notion that their country has been austerity’s model patient. The fact that the country has again become fashionable reflects the confusion in eurozone policymakers’ economic thinking and the folly of imitation across think tanks and international institutions. A bona fide socioeconomic model should be built around an ingrained “way of doing things” – indeed, so ingrained that the model, like the vaunted Nordic one, is almost impossible to replicate elsewhere.
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