The Celtic Tiger has become a tiger skin rug

Yeah, it's been over a week since I've written something for this blog. It isn't because I haven't accumulated things to write about. Now that the holiday is behind us (as well as a fabulous performance of "Of Mice and Men" by Steinbeck at the Hilberry Theater) I can get to some of them. That means there will be a few that are no longer worth writing about. Sigh.

The GOP has been pushing for a smaller government and a bit more (perhaps a lot more) austerity for the rest of us. If the Bush years weren't a good enough example of how well that works we now have the example of Ireland. Essayist Terrence Heath explains it all for us.

Ireland is in the news (just today) because its celebrated Celtic Tiger has gone bust, the country has sunk into a depression, its banks need bailing out which puts the country under the sway of EU bureaucrats, its Parliament is pushing an austerity budget, and its people are demonstrating in the streets.

What happened?

The Celtic Tiger came into being because the Irish Parliament set the corporate tax level at 12.5%, much lower than the rest of the EU and the USA. Multinational corporations set up shop there and hired lots of Irish workers. But those corporations didn't go to Ireland because the locals were great workers, the move was to create tax shelters. Other than the pay for the workers the country didn't benefit. All that corporate profit didn't stay in Ireland, didn't enhance the local quality of life. That is now being called tax piracy. The same thing is behind the faulty claim that we shouldn't tax the rich because they create jobs. Even in the boom times the national budget was being starved of income.

The lack of local investment wasn't the only problem. As in America and elsewhere in Europe the drive to deregulate made the Irish more vulnerable.

Then the worldwide recession hit. Those big multinationals had to save money. Since they had no stake in Irish society (or any society) they shed workers. The recession hit Ireland first and developed into a depression. The national government, already strapped for cash could only handle the unemployed by going into debt. Until it couldn't.

There were austerity budgets, intended to calm the credit markets and get the economy booming again. Neither happened. The government told the people, "We're all in this together." The Irish people could easily see the lie -- perhaps 300 people living large and 4 million paying the tab.

The Irish people also saw something else. There had been a ladder that allowed the working class to climb to the middle class and the middle class to climb, perhaps, into the world of the rich. That ladder is being burned. Helping the poor isn't just about money (for something to eat and a place to stay). It's also about access to services that improve quality of life and expand choices in life. Those services are disappearing. Irish life is being divided into the rich and everyone else and the wall between the two is being built higher.

Austerity didn't work. Yet the price of the EU bailout is more austerity. It deeply affects everyone -- except the people who engineered the mess. Another way out is to raise that corporate tax rate. But that is one thing the government won't consider.

To those of us in America does any of this sound -- even remotely -- familiar?

Too many efforts by the American government are promoted solely by the number of jobs they will create. Yes, America needs job and lots of them. But America needs a lot more than just jobs. We need a way for the working class to climb into prosperity. We need protections for the environment. We need improved quality of life. Austerity won't get us there and will likely burn the methods of getting there. What will get us there? Raising taxes.



Sara Robinson took a look at why so many working and middle class Americans appear to be voting against their own economic interests by voting for the GOP. The insight is through a new poll about how Americans view the Bush tax cuts about to expire and in particular about the taxes on those who make over $250,000 a year.

The question was what is the percentage of families that make over $250K? Average guess is 17%. People think that about 1 family in 6 makes that kind of money. If true, then a typical family has a reasonable chance, with a little work, of pulling down the big bucks, and when they do they don't want Uncle Sam taking it all.

The real value is less than 3% of Americans make more than $250,000 a year. That's somewhere between 1 in 35 and 1 in 50 families. The average working Joe has no chance, outside a winning lottery ticket, of needing to worry about that tax bracket.

That means conservatives have pulled a masterful con job. They've convinced more people that upward mobility is possible while at the same time they've closed off the avenues for making that mobility happen.