Reading Milton Friedman in Dublin

1005.farrell-bHenry Farrell reviews Fintan O’Toole’s Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger, in Washington Monthly:

Ireland’s economic problems started, like America’s, in the real estate market. Just as in the U.S., free-market ideology and comfortable relationships between businessmen and politicians encouraged the creation of a housing bubble. As a recent report by three National University of Ireland economists emphasizes, Ireland’s financial institutions did not fall prey to exotic financial instruments, but to lax regulation and bad business judgment. The report is tactfully silent regarding the reasons why Irish regulators made “obviously flawed” judgments, although its mention of the fact that “most large property developers in Ireland have been very closely connected to the ruling political party, Fianna Fáil,” offers some clues.

Political commentators may rush in where economists fear to tread. Fintan O’Toole is a longtime columnist for the Irish Times, and a relentless critic of Ireland’s altogether-too-comfortable relationship between business and politics. He is also a world-class cultural critic. His new book, Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger, an account of the facts of the Irish collapse, is excellent, crisp, and damning, but its real contribution is in explaining the cultural and political presuppositions that helped cause the crisis.

Both U.S. pundits and Irish politicians believed that Ireland was like a post-Reagan United States—and that this was a good thing. American commentators and politicians saw Ireland as an emerald-garbed Mini-Me, embodying U.S. values of free markets and minimal regulation. There was no shortage of American pundits willing to extol the Celtic Tiger. O’Toole singles out Benjamin Powell of the Cato Institute and Daniel Mitchell of the Heritage Foundation. He might equally have pointed to Thomas Friedman, who, in an unfortunately titled New York Times op-ed column, “Follow the Leapin’ Leprechaun,” informed continental European states that they either had to “become Ireland or … become museums.” John McCain made the even more absurd claim in a presidential debate that the U.S. needed to cut business taxes to Irish levels to stop firms from relocating elsewhere. Ireland had become so Americanized that America itself had to run to catch up.

Irish people too swallowed this codswallop. Deputy Prime Minister Mary Harney famously suggested that Ireland was spiritually closer to Boston than Berlin. Dublin audiences gaped at Michael Flatley’s dance spectacular The Celtic Tiger, which culminated with Cathleen ní Houlihan, William Butler Yeats’s embodiment of oppressed Ireland, performing a grotesque striptease to reveal bra and panties emblazoned with the Stars and Stripes.

This rhetoric of free-market empowerment reinforced long-standing problems of the Irish government.

[H/t: Mark Blyth]