The British right’s Irish rollercoaster

A wall in Dublin (Reuters)

The BBC’s Stephanie Flanders has a good post in which she notes the Irish government’s “stages of grief” through this crisis: denial, anger, acceptance. First Dublin denied that it needed a bailout. Then Irish ministers became angry at the EU for suggesting that it did. And now, finally, there seems to be an acceptance in Dublin that it will need some support from outside.

But the neoliberal British right has been on an even more dramatic emotional rollercoaster over Ireland.

First they told us that the country was an economic miracle because of its ultra-low corporation tax rates and that Britain should follow in the same direction.

Then they argued that Ireland was doing the right thing by imposing savage budget cuts and that the country would be rewarded by low interest rates and a swift economic recovery.

When this recovery did not materialise and Irish bond yields spiked it suddenly became all the fault of the euro, and the bank bailout.

And now the Germans, who until recently the right has been lauding for their fiscal conservatism and suspicion of monetary easing, have become the bad guys again for pushing Ireland in the direction of a bailout.

I think it is true that the roots of Ireland’s crisis lie in the monetary straitjacket of the single currency and the decision to guarantee all the liabilities of the insolvent Irish banks. And I think that, in the absence of a big move to fiscal union between eurozone members, it might well be in Ireland’s best interests to eliminate its primary deficit as quickly as possible and then to leave the single currency.  It is misleading to draw close parallels between the British and Irish economies when it comes to the macroeconomic impact of spending cuts, as the left is sometimes wont to do.

Yet what’s striking is how late in the day the right have started to wake up to Ireland’s structural economic problems. Until very recently Ireland was the neoliberal darling, despite its membership of the euro and despite its insistence that every bondholder in its banks needed to be made whole. And the right in this country genuinely believed that Ireland could cut its way to health at a time of depressed European and global demand.

Ireland exposes the right’s ideological blinkers in another way. Conservatives criticise Gordon Brown for failing to “abolish boom and bust” here in Britain. But they themselves cheered on the most disastrous financial and property bubble across the Irish Sea. Through all the years of crony capitalism and banking excess, the British right were nothing but supportive of Dublin’s economic model.

What happens when right-wing economic ideology meets reality? The answer in one word: Ireland.

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