Ireland, Economic Prosperity, and the Euro

Irish Prime Minister Enda Kenny said over the weekend that Irish voters in their upcoming referendum on the European Union’s fiscal union treaty can choose between economic recovery or risking Ireland’s continued participation in the euro.  Indeed, Mr Kenny painted a clear contrast between voting up and voting down those recently (re)negotiated terms of the EU’s fiscal union: a “yes” vote, he insists, removes doubts about Ireland’s commitment to the euro zone, and it helps the country regain access to international debt markets.  On the other hand, a “no” vote removes the safety net for Ireland: access to the EU’s permanent euro-zone bailout fund.

This is a false choice, since there is no conflict between the Irish exiting the euro and their economic prosperity.  No one in European leadership, or anywhere else, has made the case—or even tried to make the case—that an inhomogeneous polity can succeed.  What Mr Kenny really needs to do is make that case.  On what basis does he think using the same currency as Greece, Spain, Italy, and Portugal is a path to prosperity?  Those nations don’t have the same social imperatives that Ireland has.  Those nations don’t see money having the purpose that Ireland sees.  Those nations don’t have the same view of the role of government that Ireland has.

The social imperative of those Mediterranean nations is the importance, in their view, of social and economic safety nets.  They want those bailouts.  They want to be protected from the results of their choices—or have their governments make those choices for them.  The Irish have shown themselves, throughout their history, to favor personal initiative, personal responsibility.  The Irish have shown themselves willing to risk failure to achieve great success, and more importantly, to learn from their failures so as to achieve even greater prosperity.

The purpose of money, in the view of those Mediterranean nations, is for current consumption. These people want to buy now, whether necessities, nice-to-haves, or luxuries. The government and the safety net it provides will take care of the future.  The purpose of money for the Irish is to store value, to store the results of their labor and/or the value of things they produce or acquire with their labor.  Certainly, that includes current consumption—those necessities, nice-to-haves, and luxuries.  But that store of value also is a store against an uncertain future, which not even government can predict with any accuracy.  That store is for their own future consumption, including their retirement, in accordance with their own view of value in the realization of that future.

The purpose of government, in the view of those Mediterranean nations, is to provide that safety net.  The purpose of government, they say, is to take care of the people.  The Irish, with their world view of the moral value of personal responsibility and personal initiative, see government’s role as providing and protecting an environment in which they as individuals are able to satisfy their own imperatives, are able to fulfill their own potential to its fullest—and both that potential and the terms of that fulfillment are defined by the individuals involved, not by government.

The path to recovery  and prosperity for Greece, Spain, Italy, and Portugal may well be participation in the euro.  The path to recovery and prosperity for Ireland does not have the euro along the way.  Nor do the Irish have anything to fear in terms of access to the international financial markets (not only the debt markets).  Their recovery and prosperity are what will provide this, not any adherence to a poorly constructed union.  Moreover, in the end, Ireland has no need of any bailouts; the Irish are made of sterner stuff.

Leave a Reply

Your email address will not be published. Required fields are marked *