New York Times columnist Paul Krugman once commented derisively on Ireland’s ongoing economic recovery: “It seems obvious to me that Ireland keeps being proclaimed a success because it’s supposed to be a success: they did the austerity thing forcefully, with a minimum of complaints, so there must be a pot of gold at the end of that rainbow, right?”
The answer, according to recent data, is “Yes, there was a pot of gold—or at least broad prosperity—at the end of that rainbow.” Undoubtedly, the Celtic Tiger is making a roaring return.
Credit for the recovery goes to the very policy choices derided by Krugman—downsizing of a bloated public sector and efforts to reduce the fiscal deficit and public debt. As a result, Ireland has regained its fiscal health and become the first country to exit a European Union bailout. According to the latest economic data, Ireland has become Europe’s fastest-growing economy, attracting jobseekers from all around Europe.
In fact, as documented in The Heritage Foundation’s Index of Economic Freedom, over the past two years the Celtic Tiger has reversed six years of decline in its economic freedom and reclaimed a place as one of the world’s 10 freest economies. With the economy buttressed by institutional strengths such as strong protection of property rights, efficient business regulations and competitive tax rates, the government’s fiscal restraint has been just what was needed to unleash faster growth.
Even the International Monetary Fund has joined in the praise, saying in a recent report that the Irish recovery remains strong and the economy is “starting to fire on all cylinders.” In an International Monetary Fund economic conference entitled “Ireland—Lessons from Its Recovery from the Bank-Sovereign Loop,” a member of the executive board of the European Central Bank remarked that “the Irish economy has been an outstanding success over the last years and months.” The official warned against complacency but lauded the flexibility that has become the key component in Ireland’s success and helped it cope with shocks.
Perhaps it is time for Krugman to reconsider his claim that “the repeated invocation of Ireland as a role model has gotten to be a sick joke.” It looks like the joke is on him.
