Kevin McGeary

    TRY to imagine a country whose breakneck GDP growth is the envy of its former colonial rulers. After going from an impoverished agrarian society (enslaved to superstition) to a thriving economy that attracts foreign businesses to create jobs in its cities, the country is no longer a place whose most ambitious people invariably leave, but is seeing an influx of talent from around the world and national pride is at an all time high.

    You don’t have to imagine it, because it describes Ireland during its period as the “Celtic Tiger” which ended with the global financial crisis of 2008.

    Chinese Vice President Xi Jinping’s visit to the country last week should be the beginning of a beautiful friendship. Both countries have long seen themselves as great cultures and peace-loving victims of foreign aggression whose leading export was for a long time cheap labor.

    However, the two countries have had contrasting fortunes since the financial crisis. The Irish Government’s spending cuts on infrastructure after its property boom ended will, for generations to come, be seen as a model of how not to spur an economic recovery. Ireland’s economy saw a 4.7 percent growth in 2007, a 1.7 percent contraction in 2008, a 7.1 percent contraction in 2009, followed by more negative growth in 2010. In mid-2011, Moody’s downgraded Ireland’s government bond ratings to junk. In contrast, the Chinese Central Government introduced stimulus spending that kept economic growth steady. On the surface, China has done everything right and has nothing to learn from Ireland.

    Ireland’s economic miracle collapsed, not because it was a house of cards, like China’s miracle, it wasn’t. “The Celtic Tiger” was built on a young, well-educated workforce, cheap labor, and favorable taxes for foreign businesses to create jobs. The collapse came because of unscrupulous leaders and a credulous public that was too eager to invest in over-priced property. Even good systems depend on the integrity of those administering them.

    How much integrity did Ireland’s leaders during the Celtic Tiger years have? Prime Minister Bertie Ahern refused to participate in the Iraq War, and stated in December 2003 that his government had always opposed the war. Any other stance would have been politically disastrous. However, in May 2003, Ahern defended his decision to let the U.S. military use Shannon Airport as a stopover by praising the decision to depose Saddam Hussein. Ahern’s Fianna Fail government that led the country from 1997 until losing an unprecedented 57 seats in last year’s election, was involved in numerous corruption scandals, many of which are yet to be resolved.

    Fianna Fail (which roughly translates to English as Warriors of Ireland) are seen as inheritors of the nationalist spirit, and are the populist party that governs by default, having been in power for 61 of the past 80 years. But their style of leadership was always based on pragmatism and short-term political gain. During the boom, the financial sector expanded rapidly which led to careless lending, lax supervision and the recruitment of unqualified and inexperienced staff. Author Fintan O’Toole described the collapse as being caused by bankers being connected to politicians who in turn held power over the regulators.

    Xi Jinping has already warned of unscrupulous officials potentially doing long-term damage to China. He criticized careerist cadres as being unwilling to look squarely at reality and not daring to speak the truth. China needs to use the failure of the Celtic Tiger to learn some lessons about dealing with economic hardship.

    In Ireland, the suicide rate increased rapidly after the property bubble burst in 2008 and unemployment stood at 14.2 percent last month. However, the GDP per capita is still high, and the workforce is still young and well-educated. Moreover, the world can withstand an unstable and economically ravaged Ireland, whereas it cannot afford to see China go the same way. Let’s hope Xi’s trip to Shannon Airport was an enlightening one.

    (The author is a Shenzhen Daily senior copy editor and writer.)