It was a dark, rainy day in Dublin and I decided to take shelter in a small pub. With a pint of Guinness in hand, I listened to an old, Irish man play his guitar and sing folk songs about Ireland’s beautiful country side, fight for independence and love of drinking while the entire bar sang along. It is rare that prior perception and reality are aligned when traveling, but this scene was exactly how I had pictured Ireland in my mind. As time passed, I realized a common theme in all of the songs – a pessimistic outlook combined with a spirit of perseverance. It was a “times are tough, but life goes on” perspective that appeared to be engrained in the Irish psyche. As the guitar player sang and the people toasted about how all the jobs were gone yet the Guinness still flowed, it hit me how beneficial this attitude might be to their economic survival. Ireland was in a similar position as Greece and Spain in its inability to pay its debts and forced to face harsh austerity measures. Yet, appropriate steps were taken, there wasn’t mass rioting against austerity and recovery appears to be somewhat on its way.
Perhaps the Irish were simply too used to hardship, or too stubborn, to let it interfere with their daily life. They have a knack for letting life go on and even embracing their troubles – giving each person a better story to tell and greater respect for having endured the suffering. The famous Irish poet and playwright, William Butler Yeats, humorously stated it well: “Being Irish, he had an abiding sense of tragedy, which sustained him through temporary periods of joy.” From wars to gain independence from Britain, civil wars over the treaties with the United Kingdom, religious clashes between Catholics and Protestants, terrorist attacks conducted by the IRA, mass emigration and a weak economy certainly made the 1900’s a tough century for Ireland. Even up until the 1980’s, standards of living were far below its European neighbors, unemployment was close to 20% and a third of Ireland’s population lived below the poverty line.
But that all changed in the 1990’s when things started to boom for the small island country. European aid and investment stimulated growth in the economy and the country began to build its infrastructure. Business incentives and low corporate tax rates attracted foreign companies looking for an easy entry point into EU markets. In this decade, Ireland went from being one of the poorest countries in Europe to one of the wealthiest and unemployment fell from nearly 20% to 4%.
This rapid growth, optimism and foreign investment was great for the country, but soon led to an unsustainably high construction and real estate boom, followed by an influx of international derivates and complicated financial instruments. The Irish banks had cheap foreign money and lent it out excessively. As Vanity Fair and The Economist stated, “Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do with it was to buy Ireland. From one another” and “the twin articles of independent Ireland’s faith, Catholicism and nationalism, were eclipsed by material ambition: the desire to get on, to improve one’s station in life.” The Irish continued to buy high and sell higher, getting very rich in the process.
Then Lehman Brothers collapsed in 2008 and the credit crisis commenced. The inflated economy crashed and all six of the main Irish banks nearly went bankrupt, saved only by audacious government guarantees and an International Monetary Fund, European Union and European Central Bank bailout. After a decade of extraordinary growth, wealth creation and optimism, the “Celtic Tiger” ended up right where it started: high unemployment, a weak economy and mass emigration. The country went from being a case study for economic success to one the frailest economies in the developed world.
The government cut public spending significantly in compliance with bailout terms and the population complied. The country has done a surprisingly effective job picking up the pieces of their economy under such austerity and its financial condition has improved. It isn’t as bad as the other crisis countries – Greece, Spain, Portugal, Italty – but clearly worse than the rest of Europe. So while it is looking better relatively, Ireland, and the rest of the Eurozone, remains a primary concern for the interconnected global economy and financial markets.
And the Irish people? Many argue that the tax payers are paying too high of a price, but the general population seems to have shrugged their shoulders and carried on, equipped with new stories to tell about that one time when they were all rich.