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Home Publications Blogs Beat the Press Ireland Is Still Waiting for the Fruits of Austerity

Ireland Is Still Waiting for the Fruits of Austerity

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Saturday, 22 June 2013 08:57

Ireland has been repeatedly touted as a success story by advocates of austerity. However as Floyd Norris points out in a nice piece today, the widely touted turnaround is mostly a quirk in the data.

For tax purposes, several large UK companies have moved their headquarters from the UK to Ireland. This changes nothing in terms of Ireland's actual GNP, in the sense of money flowing to people living in Ireland, but it does lead to an increase in reported GNP. The profits of these UK companies now show up in Ireland's GNP rather than in the UK. When an adjustment is made for this switch Ireland's GNP growth looks considerably weaker the last four years. Instead of turning positive in 2010 its current account just turned positive last year, and even then just by a small amount.

It seems like the austerity advocates will have to look elsewhere for their success story.

Comments (3)Add Comment
Irish Numbers Mostly Blarney
written by Charley James, June 22, 2013 1:36
Your colleague Paul Krugman wrote about this quirk in Irish GNP numbers some time ago, observing that sleight of hand is the only conceivable way austerity policies can show an improving economy.

Another example is Latvia, also subject to cruel and unusual punishment at the hands of the austerians, where declining unemployment numbers have been touted as evidence that austerity works. There are only two problems with this analysis: First, Latvian unemployment is still hovering around 17%, hardly proof of anything except much of the population is still suffering. Second, much of the decline in unemployment resulted from unemployed Latvians leaving the country, seeking work in Germany and France and thus they're no longer counted in the Latvian numbers.

Like R-R in the States, European austerians are filled with as much blarney as any other Irish story.
...
written by Kat, June 22, 2013 4:22
But if you're just looking for an Ireland success story hop in the time machine!
http://www.nytimes.com/2005/07/01/opinion/01friedman.html?_r=0
Ireland Is Still Waiting for the Fruits of Austerity
written by caseyf5, June 23, 2013 4:30
The fruits of austerity can be heard in the song Lemon Tree. The POS pushing austerity deserve the place down under when they pass away. Dante wrote about its location. An old phrase comes to mind. "lies, damned lies and statistics". The austerians incentive is to run the con for as long as possible. Another old phrase now struck my brain. "You can fool all of the people some of the time, some of the people all of the time but you can't fool all of the people all of the time". I would like to add that fools can be fooled repeatedly (that's why they are called fools).

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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