Wednesday, February 24, 2010

How we blew the boom Las Vegas Style

It was not so long ago that the Irish Economy was seen as one of the strongest in the world. Politicians and economists globally pointed to how a small country on the edge of Europe had one of the fastest growing economies in the world. Low taxation, light touch regulation and borrowing were the cornerstones. Ireland was rich and the rising tide would bring home all boats. The Celtic Tiger sandcastle would last forever despite its foundations being built on sand.

You must first understand where you went wrong before you put things right. The key word here is bubble. The construction bubble brought inflated land prices and overpriced houses. Government policy encouraged the bubbles growth. This sparked a borrowing mania that saw thousands of young families borrow heavily for properties worth a fraction of the price. The financial bubble made this possible and saw an elite borrow billions and use banks as their own personal cash cow. Bankers abused their positions and the regulator turned a blind eye.

Ireland’s version of casino capitalism failed. Our Las Vegas style boom finally went bust as it did in other countries including the US. One place that went even crazier than us was Dubai. Up until recently Dubai was seen as an ‘oasis of opportunity’, the king of the free-market economy. Extreme wealth for the rich, zero taxes for business, un-regulated banking and turning a blind eye to corporate corruption were celebrated and envied. Until of course the economic crash and the rude awakening as Dubai cancelled on its debt. The sand castle collapsed.

Why is it important to understand the past? Well it is said that you cannot solve a problem with the same thinking that created it. This is true. We need a new vision for Ireland. Not empty rhetoric or a utopian dream but a real vision for the future. It is time for genuine republican politics. We need to get our priorities right and learn from our mistakes. Casino capitalism will always fail. A republican vision for the future is about meeting people’s basic needs: a job, food, housing, health, education, and a sustainable environment. It is about a banking system that works for all citizens. It is about offering unemployed people work by creating an environment in which jobs can be created. Things can be better but only if we make the right choices.

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