Sunday, 21 December 2008

Be skeptical of miracles

It's probably unfair of me to pick on Thomas L. Friedman because there are literally thousands of articles that described Ireland in the early part of this century as being the home of an economic miracle. But his article in The New York Times extolling the virtues of economic management in the Irish Republic comes near the top of the list in a Google search and is so well written that reading it with hindsight is more amusing than most of the others.

This is what Friedman wrote in May 2005

Here's something you probably didn't know: Ireland today is the richest country in the European Union after Luxembourg.

Yes, the country that for hundreds of years was best known for emigration, tragic poets, famines, civil wars and leprechauns today has a per capita G.D.P. higher than that of Germany, France and Britain. How Ireland went from the sick man of Europe to the rich man in less than a generation is an amazing story. It tells you a lot about Europe today: all the innovation is happening on the periphery by those countries embracing globalization in their own ways - Ireland, Britain, Scandinavia and Eastern Europe - while those following the French-German social model are suffering high unemployment and low growth.

And as a comparison consider these words from this morning’s Irish Sunday Independent newspaper:

At an office in the IFSC in Dublin on Tuesday night the owners of commercial property were told to expect that a third of retail businesses throughout the country will close between January and Easter next year.

The shocking assessment was delivered in a week in which definitive evidence emerged that the cosseted political and banking establishment are operating in what several observers have described as a “virtual world”.

The devastating impact of the economic crisis has been evident for some time: official figures last week showed that unemployment jumped from 4.6 per cent earlier this year to 7 per cent at the end of September.

The ESRI has predicted that unemployment will hit 10 per cent next year. But many economists believe that figure has already been reached and is likely to be surpassed: some say unemployment may even exceed an astonishing 12 per cent, or close to 500,000 people.

… In Ireland, the economy will decline by at least 4 per cent, perhaps up to 6 per cent. As a result, at least 117,000 people will lose their jobs next year and a minimum 50,000 will be forced to emigrate.

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