Times Tanks Ireland's 'Austerity'-Based Recovery: It 'Looks to be Short-lived'
The New York Times launched yet another attack on government financial austerity on the front of Tuesday's Business section, by Liz Alderman from Dublin: 'In Ireland, Austerity Is Praised But Painful.' The jump-page headline read, 'Ireland's Austerity Steps Are Praised, But Many of Its Citizens Feel Pain.' The text box even put a wet blanket on Ireland's economic prospects, amid signs government cutbacks may be working: 'The country is hailed as a survivor, but its recovery looks to be short-lived.' Does the Times really want to drive Ireland's economy down in the name of high government spending?
As European leaders scramble to overcome the Continent's debt crisis, many are pointing to Ireland as a model for how to get out of the troubles.
Having embraced severe belt-tightening to mend its tattered finances, Ireland is showing glimmers of a turnaround. A year after it received a 67.5 billion euro bailout, or about $90 billion at current exchange rates, modest growth has returned and the budget deficit is shrinking.
But the effects of austerity have pummeled Ireland's fragile economy, leaving scars that are likely to take years to heal. Nearly 40,000 Irish have fled the country this year alone in search of a brighter future elsewhere; the trend is expected to continue.
Alderman forwarded praise from an economist and German Chancellor Angela Merkel but quickly qualified it:
Underneath the surface, however, the grinding reality of Irish life belies those glowing commendations.
Salaries of nurses, professors and other public sector workers have been cut around 20 percent. A range of taxes, including on housing and water, have increased. Investment in public works is virtually moribund.
There was a grudging bow to the actual economic statistics deep into the story...
There are signs of improvement. Compared with the previous year, exports are up 5.4 percent for the first nine months of 2011, driven by gains from Pfizer, Intel, SAP and other multinational companies that were drawn to Ireland in the 1990s and 2000s by its low taxes, well-educated English-speaking work force and access to the European market. New information technology companies like LinkedIn and Facebook have recently arrived.
...only to be quickly doused by predictions:
Moreover, the recovery looks to be short-lived, probably putting that goal out of reach. The Economic and Social Research Institute, based in Dublin, recently cut its 2012 growth forecasts for Ireland in half, to under 1 percent. It cited an expected recession in the wider euro zone, in part because the austerity being pressed on much of Europe by Germany and the European Central Bank is seen as worsening the prospects for recovery rather than improving them.
Alderman wrote virtually the same story back on June 29, 2010, 'Ireland Paying A High Price For Austerity - As Europe Seeks Cuts, a Cautionary Tale.' The picture has improved somewhat since then, but the story remains: From America to Europe, fiscal conservatism is bad medicine.