Nobel prize winning economist and New York Times columnist Paul Krugman has once again pointed to Ireland’s failures as an example of how government job cuts do not work.
Krugman often cites Ireland as the poster child for false hopes of a recovery there because of the austerity measures favored by European governments and the GOP in America.
Krugman believes in more not less government intervention ad says repeatedly that efforts to portray Ireland as in recovery mode are completely misjudged.
Writing in The New York Times on Friday Krugman stated:
“The really decisive evidence on government cuts, however, comes from Europe. Consider the case of Ireland, which has reduced public employment by 28,000 since 2008 — the equivalent, as a share of population, of laying off 1.9 million workers here. These cuts were hailed by conservatives, who predicted great results.
“'The Irish economy is showing encouraging signs of recovery,' declared Alan Reynolds of the Cato Institute in June 2010.
But recovery never came; Irish unemployment is currently more than 14 percent. Ireland’s experience shows that austerity in the face of a depressed economy is a terrible mistake to be avoided if possible.
And the point is that in America it is possible. You can argue that countries like Ireland had and have very limited policy choices. But America — which unlike Europe has a federal government — has an easy way to reverse the job cuts that are killing the recovery: have the feds, who can borrow at historically low rates, provide aid that helps state and local governments weather the hard times. That, in essence, is what the president was proposing and Mr. Romney was deriding.”
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Switch to the desktop site to post a comment.Bythebay | Jun 18, 2012, 08:30 PM EDT
greece is still in the Eurozone Paul, Wrong again. They accept the bailout and its conditions. Ha, ha. How's your imminent default on July 1, got any great ideas about how to pay off your $15 tillion or get the President and Congress to agree a solution. Comeon so-called great mind, what's the answer?
EphraimKibbey | Jun 18, 2012, 07:25 PM EDT
I just heard the "strangest" thing on one of the Wall Street TV Shows. They said that with Greece, Spain, Italy and Ireland all on the brink, the only thing that the EU Central Bank can do to save the European Union is to print more euros. The question is whether Germany will allow it.
BulldogMania | Jun 18, 2012, 02:19 PM EDT
Does anyone really care what this liberal has to say? I mean seriously...what are his credentials...let's take a look. Nobel Prize...well, we all know the this means nothing...they are liberal awards, promoted by liberals for liberals. They mean nothing. He works for the New York Times, LMAO, the most liberal biased rag in the world. This man is a clown...all he promotes is more government spending, more socialism and more chaos for the world.
casualMBA | Jun 17, 2012, 09:33 PM EDT
…there is also the “misallocation,” I might add, of “expectations”… building “shell estates” can not be sustained indefinitely, given absorption rates and the condition of the properties…anymore than the “shell” estates held by the Churches, and others, in southwest Ireland (on confiscated Fitzgerald lands)can be sustained forever… once (as it has) Ireland stabilizes its sovereignty, these estates – and they are – should not be used as collateral for the future allocation of either capital resources (projects sought and funded on the value of Fitzgerald lands) without just recompense to the FitzGeralds (and, eventually, the O’Neills and O’Donnells) or the allocation of natural resources (water, oil & gas, etc.)… Krugman says “austerity” is the wrong course for Ireland…misallocation of labor, capital, natural resources, industrial capacity, and conceptual (intellectual property) resources – to include the misallocation of Fitzgerald lands in southwest Ireland – is the wrong course for Ireland.
casualMBA | Jun 17, 2012, 07:53 PM EDT
By the Bay, I will wait on others to correct your impression of “failed” economy vis a vis China…I personally prefer to correct Dean Jackson’s impression that central banks set “Interest rates”… central banks do NOT set “interest rates.”…through prudent (or imprudent) monetary policy they can alter the “discount” rate, reserve ratios, etc., and ultimately impact interest rates, yet they do not ‘set’ the i rate…where you are hammering the nail square on, DJ, is in raising the question of the misallocation of labor, capital, and natural resources…and there are many questions about each
Bythebay | Jun 17, 2012, 07:49 PM EDT
wdwrkr371, primary school taunting will get you nowhere. Grow up.
Bythebay | Jun 17, 2012, 07:26 PM EDT
EphraimKibbey,you're mistaken, the US printing money has made it the most debted country in the world. Additionally you can't even decide how to control your debt or pay it. The dollar is weak, that's why US tourists can't afford to come to Ireland or Europe and have been unable to for years, the US dollar is worth so much less than the Euro and most other world currencies. You're a failed economy depending on China holding your debt.
EphraimKibbey | Jun 17, 2012, 05:21 PM EDT
@Bythebay - you are mistaken! Printing money does not create DEBT. Borrowing money from China and selling bonds to people and pension funds creates debt! As long as the dollar is strong, it can be printed to pay off that debt as we wish. ***** @DeanJackson is correct however. The only problem with doing that is the worry of massive inflation but we are not yet doing well enough for that to be a concern. As a matter of fact, most investers would like to see interest rates a bit higher. The nice thing about printing your own money, instead of asking Germany to do it for you, is that you can start and stop printing as your own economy dictates. It was recently calculated that investers are charging less in interest than the change in the dollar meaning that they are paying the U.S. government to borrow their money. The corrected interest rate in constant dollars is currently NEGATIVE .5 to 1%. The U.S. is wasting this perfect time to borrow and invest in our economy because the GOP wants to destroy Obama and is run by a bunch of Ayn Rand, me, me, me fanatics.
casualMBA | Jun 17, 2012, 05:13 PM EDT
Spain has just had 100 Billion euros allocated to shore up its banks…Ireland has more shells in its construction and real estate market than it has on some of its strands…This is not, Mr. Krugman, “austerity” in the allocation of resources…
casualMBA | Jun 17, 2012, 05:05 PM EDT
Howdy, mates. Yep, someone may have said the same of me, more than once. Meanwhile, @Dean Jackson, while interest (i) and Return on Investment (ROI) have some overlap in effect, there is certainly no direct relationship between the two. An ROI is a measure of a specific (investment) project whereas interest (i) - particularly when speaking of an entire economy or central bank- is a partial indicator of the cost of capital in the financial system. Quite different. Concisely, there is no casual, or co-varying, relationship between the variables.
wdwrkr371 | Jun 17, 2012, 04:25 PM EDT
Bythebay = Egit with big mouth.
Bythebay | Jun 17, 2012, 02:51 PM EDT
EphraimKibbey, the US has been printing as much money as it wants and that's what has gotten it $15 trillion in debt, imminent default on July 1 and the most debted country in the world. It is owned by the Chinese.
Bythebay | Jun 17, 2012, 02:20 PM EDT
Ireland didn't rebound economically not because of anything Ireland didn't do but because of the world economies such as the US and other European countries. With the US refusing to deal with its $15 trillion debt and so many US companies in Ireland we will continue to be effected by the ineptitudes of the US economic crisis.
Bythebay | Jun 17, 2012, 02:17 PM EDT
The US is on austerity and is not creating jobs. You will face economic collapse on July 1 if you don't reach agreeement on your deficit. After the Presidential election, you will know austerity as no other country does. You are the most debted nation in the world.
Bythebay | Jun 17, 2012, 02:15 PM EDT
Those in the US who have no comprehension about the EU, Ireland is independent! However, as you all know if you have mortgages, credit card debt, student loans, etc. there are requirements when you receive those loans. Ireland has reqirements for the loans received from the EU and IMF in Eashington and is fulfilling those requirements. If we didn't, it could cause economic collapse not only in Europe but also in the US.
EphraimKibbey | Jun 17, 2012, 01:17 PM EDT
@AengusOg - "austerity and sacrifice" is the problem! It is destroying the economies in Europe and is again stagnating ours. While the stimulus was in place we started coming back but then the republican govenrors started firing essential public workers and stopped the growth in the economy. Just what they wanted so they could have a talking point against Obama.
lokionline | Jun 17, 2012, 12:31 PM EDT
Here is a question you should all be asking. How is Iceland doing and what can we learn from that?
BrianO | Jun 17, 2012, 11:04 AM EDT
@Deanjackson, EphraimK is hired by the Obama campaign to write on such sites to promote Obama, occasionally he slips and will say "join us", as Obama slides and is shown to be the non caring statist that he is, Writers like ephraim have less logical material to work with.
ciaradexy | Jun 17, 2012, 10:52 AM EDT
There are plenty of jobs in Ireland just not in the areas people want to work in which is why they are emigrating. They could stay in Ireland and work the jobs they don't want or they could go abroad and get the experience and lifestyle they want so they're choosing emigration. Plenty people with jobs in Ireland chose to emigrate because they wanted to experience living in another country. nothing wrong with that. With a lot of luck, the EU will fail and Ireland will get her currency back. Ireland will struggle for a year or 2 but will get back on track although I wouldnt trust the Irish government as far as i could throw the pack of liars.
AengusOg | Jun 17, 2012, 01:33 AM EDT
@Kibbey Oh, you mean it would work like a tax cut with the government deciding what to do with its increased cut. What happened to "austerity and sacrifice."
EphraimKibbey | Jun 17, 2012, 01:18 AM EDT
@DeanJackson - Another point is that an independent Ireland could also print as much money as it needed to pay off its debts. Ben Franklin said that paper money was the greatest invention he had ever seen for the cash strapped new USofA. ***** @AengusOg - The U.S. is able to borrow at record low rates right now. If we use that money to put more people back to work repairing infrastructure, teaching, fighting fires and policing, those people will buy stuff. The manufacturers will have to make more of that stuff they bought. They will need to hire more workers and buy more raw materials. These new workers will also buy stuff and so the spiral will continue upward as it did under Clinton. Soon MacDonalds will have trouble finding workers and increase wages as it did in the 90's because everyone will be working better paying jobs. All of those new workers will pay taxes. The government can print as much money as it needs to pay off its low interest debt. Under Bush we started a downward spiral from our surplus by outsourcing domestic jobs. We had fewer and fewer people buying stuff and fewer and fewer paying taxes. Cutting jobs just makes the downward spiral go down faster as is happening all across Europe.
Bythebay | Jun 16, 2012, 05:41 PM EDT
The bailout of Ireland is from the European Union and the International Monetary Fund primarily. Shame on those outside Ireland esp. in the US to use this as another anti-British excuse. If those of you outside Ireland are so smart and so knowledgeable about how Ireland should be run you'd be here running it. Otherwise you're just running off at the mouth with pointless criticism which Ireland does not accept.
aloistmartin | Jun 16, 2012, 05:19 PM EDT
The Question of Failure; With Regards to The Irish Economy, belongs to the context of Dublin`s Bailout by Lord England ! Shame On Ireland`s Fat Kat Bourgeoisie "Free Stater`s" ! A Hundred Years from now Irishmen will look back on the events in Egypt, Greece, France , Italy, etc. etc. much in the same way Today`s China looks back at The Boxer Rebellion, or the Wuchang Uprising... "It would have been better for them not to have known the way of righteousness, than to have known it and then to turn their backs on the sacred command that was passed on to them" PETER II 2:21
Bythebay | Jun 16, 2012, 03:06 PM EDT
Krugman's anti-Euro/German bias is very obvious in his criticism of Ireland, his grandparents were immigrants from Eastern Europe. He obviously resents Ireland's support for the Palestinians and a Palestinian State in opposition to the Israeli attempted annihilation of the Palestinian people. Ireland's budgetary situation has been mandated by the EU/Germans and the IMF in Washington, DC, which Krugman is well aware of.
Bythebay | Jun 16, 2012, 02:16 PM EDT
The US is the most debted country in the world, owing to China and other Asian countries. Klugman knows nothing either about Ireland's economy or Europe's. His lack of knowledge doesn't apply to Ireland. He needs to sort out the US which will be defaulting on July 1.
BrianO | Jun 16, 2012, 12:51 PM EDT
Irish Centrals economist Krugman.
Bythebay | Jun 16, 2012, 12:21 PM EDT
Krugman need only look at he US for economic failure. Nothing has yet been done to increase jobs there nor has anything been done to deal with the deficit of $15 trillion and imminent default on July 1. He would do best sorting out the problems where he lives rather than looking at Ireland or any other country which he knows nothing about.
AengusOg | Jun 16, 2012, 10:56 AM EDT
I am not opposed to counter-intuitive solutions. I would like to see a plan on how increased government spending in the face of huge deficits, would jump start the economy. Unlike the private sector, which responds on a profit basis, which can be easily understood, on what bases would government decisions be made? Look at yesterday's paradigm, European socialism. It is falling victim to extravagant social welfare programs, open borders (East eats West), vastly different work ethics (South sinks North) and lack of leadership. The odds that dreams will come true without a plan are just about those of a Powerball or Mega lottery ticket winner. Show me the plan.
wjb1tex | Jun 16, 2012, 10:11 AM EDT
One could argue that it is the excessive government intervention that got us into this mess and continuing to spend will make it even worse. If government spending makes it better why after the stimulis (sp?) and bailouts has it not gotten better ?