Sunday, October 26, 2008

Ireland's woes

How things change so quickly. Just last year, the BBC painted a picture of a land divided by the large riches that had been heaped upon its innocent shoulders.

"But has this prosperity come at a price?" they wondered. Apparently so, particularly for the farmers, experimental rock musicians and returning emigrant from Mexico (who was particularly worried about all the immigrants in Ireland!) the journalist interviewed. Ireland, it seemed had lost its soul.

Contrast this with the latest assessment of Ireland from a bbc journalist. Our "house of cards" has come tumbling down apparently. The folks at Smithson's diner in Drogheda are racked with worry. The article notes about the area: "During the unprecedented boom years, the population here grew by a third. Now, it is an unemployment black-spot - ringed by new developments with empty, unsold houses."

Its a pity that the farmer, experimental rock musician and returning Mexican emigrant from the last article weren't reinterviewed as whatever problems seemed like last year, I doubt this is going to be an improvement. I should be fair to them as none of them specifically blamed prosperity but the moral of the article to me seemed to that prosperity had reduced welfare and I argued then that more thought needed to be given to what had improved, in particular the positive effect of reduced unemployment.

For obvious reasons, the debate about the role of economic progress in wider well-being has been on my mind a lot recently. There is some evidence (particularly from the suicide rate) that the Celtic Tiger prosperity was not unambiguously positive. However, it looks like we will now get a chance to see what the other side is like. I've posted evidence before that some aspects of health may improve if there is to be a recession and it may also be the case that people's focus on wealth and consumerism as a source of status may be undermined, which may be good depending on what you read. However, the literature on the negative effect of unemployment, farm failure, business failure, home repossession and other negative features of recession on psychological outcomes seems too overwhelming to me to think of this slowdown as anything but a bad thing. In some sense, this may be one the challenges of the next few years - to break the link between economic slowdown and the psychological trauma experienced by people who lose their jobs and status.

1 comment:

Mark McG said...

As with the policy interventions of the 1940s in Ireland, I think it may take decades to evaluate the full consequences of the boom years. Authors such as Simon Stretzer have written about the disruptive effects of rapid economic growth, and in the Irish case there may be elements of an intertemporal trade off that are not yet apparent. In particular I’m thinking of alcohol/drug consumption, obesity and the physical and social costs of increasingly long commutes. It would be really interesting to fast forward 50 years and examine the outcomes of the cohort born during the Celtic Tiger. Revealed preference in voting patterns suggests that people were largely satisfied with the way the country was run (at least until now!), however the Irish housing crisis is further evidence that optimal decision making can be distorted by a variety of psychological factors.