Category: Economics

The Phantom Economy

ABC News has an interesting piece on why the booming US economy doesn’t translate into a positive economic outlook for the average American. It is somewhat mysterious – unemployment is very low (4.7%), economic growth is high, and wage growth is steady. By all accounts, the average American worker is exceptionally well off – despite all the worries about outsourcing, 2.3 million jobs have been added to the US economy since August of 2003. Even tax revenues have gone sharply upward. So why is there such pessimism over the state of the economy?

Gas prices are certainly part of it, as they have the largest instant psychological impact. People don’t immediately see a fluctuation in GDP growth, but the second prices at the pump go up $0.05 everyone in the country notices. However, SUV sales are still strong, and people don’t seem to be cutting back on consumption, which suggests that filling up is nowhere near painful enough to warrant people changing their habits. It’s been estimated that $4/gal gas would have a significant impact on people’s habits, but $2.50-$3/gal doesn’t seem to be forcing people to take much action.

If jobs and gas aren’t the issue, what else is? The ABC article mentions debt as being one factor. High levels of credit card debt and home equity debt is altogether too common in this country – if you can fog a mirror, you can get a credit card these days. It’s exceptionally easy for someone to get in over their heads, and payday loan/car title loan shops prey on the financially weak. This would certainly put a squeeze on the average consumer, even if all they have is a few grand in credit card debt.

Of course, the media plays a role in all of this too. Remember in 2004 when Bush was responsible for “the worst economy since Hubert Hoover”? Either the US economy has made a miraculous recovery since then, meaning that Bush’s policies did more than the New Deal in a faster amount of time, or that whole line of argumentation was a crock. It doesn’t take a genius to figure out which scenario is the most likely. However, the media narrative of imminent doom never really went away – part of it is due to our natural sense of pessimism, part of it is because good news doesn’t garner good ratings, and undoubtedly part of it is due to the political biases of the media – any news which might give the Bush Administration credit isn’t likely to make it through the ideological blinders of the mainstream media.

The new Treasury Secretary Henry Paulson, formerly of Goldman Sachs has his work cut out for him – the US economy is doing very well, but we’ve also gone through one of the lengthier periods of economic growth in recent times – and what comes up must come down. Not only that, but Paulson is going to have to combat that sense of economic pessimism, which is a difficult job in itself. John Snow, Paulson’s predecessor at the Treasury was an able economic steward, but a very poor salesman. Paulson’s position as the former CEO of Goldman Sachs means that he’ll have much more influence over the markets than Snow did. Paulson’s not the showy type, but he is the sort of person who can make an effective Secretary of the Treasury.

The US economy is performing exceptionally well, and nearly every sign of growth and success bear that out – but because the Bush Administration hasn’t fought back against the pessimism of their critics in any real, that negative public perception is hurting Bush’s approval ratings. Paulson will have a difficult job in combating that perception, but at least the Bush Administration seems to be willing to combat the problem.

How Bad Is The Chinese Economy?

Earlier this year I wrote a piece on the potential for a Chinese banking collapse along the lines of the Japanese recession of the 1990s. Now, The Australian reports that China has over 1 trillion in non-performing loans (NPLs):

According to Ernst & Young, the accounting firm, bad loans in the Chinese financial system have reached a staggering $US911 billion ($1.18 trillion), including $US225 billion in potential future NPLs in the four largest state-owned banks.

This equals 40 per cent of gross domestic product and China has already spent the equivalent of 25-30 per cent of GDP in previous bank bail-outs.

The revelation shows that half-hearted reforms have addressed merely the symptoms of China’s financial fragility. Poor business practices are blamed for NPLs but the real source is political. As long as the communist party relies on state-controlled banks to maintain an unreformed core of a command economy, Chinese banks will make more bad loans.

Systemic economic waste, bank lending practices, political patronage and the survival of a one-party state are inseparably intertwined in China. The party can no longer secure the loyalty of its 70 million members through ideological indoctrination; instead, it uses material perks and careers in government and state-owned enterprises (SOEs). That is why, after nearly 30 years of economic reform, the state still owns 56 per cent of the fixed capital stock. The unreformed core of the economy is the base of political patronage.

China’s transition from communism to crony capitalism hasn’t done all that much to diminish the centralization of the Chinese economy – the Politburo and other government officials are still the main economic movers and shakers in the country. China’s nomenklatura basically can rob the system blind, and no one bats an eyelash. This sort of endemic cronyism and corruption is one of the major factors that caused the Japanese banking crash. If such a thing were to happen to China, it would have major repercussions across the world economy.

China’s rapid industrialization has come at the expense of financial transparency and accountability – which means sooner or later China’s meteoric rise could be followed by a precipitous fall. The Chinese government needs to get the lending practices of Chinese banks under control – which will require some rather deep structural revisions to the way the Chinese economy is run. A banking collapse in China would quickly spread, leaving havoc in its wake. Ultimately Beijing must reform or sooner or later the foundations upon which China’s economy is based will collapse right out from under them.

Will The Republicans Rediscover Limited Government?

The CATO Institute is running another great installment of their Cato Unbound online symposia, this time leading off with a provocative essay by David Frum on the Republican abrogation of their limited-government principles:

The state is growing again—and it is preprogrammed to carry on growing. Health spending will rise, pension spending will rise, and taxes will rise.

Now I still continue to hope that the Republican party will lean against these trends. But there’s a big difference between being the party of less government and a party of small government. It’s one thing to try to slow down opponents as they try to enact their vision of society into law. It’s a very different thing to have a vision of one’s own.

And the day in which we could look to the GOP to have an affirmative small-government vision of its own has I think definitively passed.

I hope that Frum is wrong, but fear he is right.

Let’s face it, Americans have an addiction to Big Government – the costs are largely transparent to them. So what if regulations cost this country tens of billions of dollars in lost productivity? Those costs never appear on a ledger, they never appear in the lives of everyday Americans. People don’t react to theory, they react to what they see and experience. Republicans have been successful in fighting for lower taxes because the average Joe Sixpack and Jane Soccer Mom can see with every paycheck what the government takes out. People don’t see the slowing of economic growth that comes with the pervasive intrusion of the state into every facet of our lives.

Frum notes three reasons why small government conservatives can’t do much to change that status quo: one, they’re a minority in the Republican Party, second, the Republican leadership is tightly in the grip of business interests, and finally, it would require them to repudiate much of the Bush Administration’s economic legacy. On all those accounts, Frum is sadly right. The Republican Party has lost touch with its Reaganite roots when it comes to fiscal matters. The Bush Administration and the Republican-led Congress have spend like drunken sailors – except drunken sailors tend to spend their own money rather than someone else’s.

Does that mean we’re damned to eternal fiscal irresponsibility and government that grows to consume everything? Are we all merrily skipping down the yellow brick road to serfdom?

Sooner or later the costs of government become simply too large to ignore. Already there are some promising signs of a pushback against pork. Again, people’s political behavior is influence predominantly by what they experience themselves. If fiscal conservatives want to make an impact, this can’t be a discussion of policy. Policy is wonderfully interesting for policy wonks like the audience of this blog and it’s author. It doesn’t mean a thing to the American electorate. People don’t react to even the most impassioned pleas for the theoretical good of “limited government.” We may understand the value of limited government, but that won’t lead to the sort of mass political movement that can shape policy.

Fiscal conservatives need to make the value of limited government apparent to the people. How does the ever-expanding reach of government effect the average voter? Find the answer to that, and you can start to build a movement. Once you have a movement, then you can start to change the direction of the Republican Party. Expecting a politician to do something as audacious as lead is simply too much to expect in an era of focus groups and spot polling.

The GOP missed the boat on Social Security once – the right talked about the long-term fiscal solvency of the Social Security Trust Fund. The AARP and other interest groups scared the hell out of seniors that they were going to lose their benefits. It doesn’t take a rocket scientist to figure out which approach will generate the most political momentum. What the GOP needed to do is not surrender the issue, but turn it into a pocketbook issue. People don’t care about budgetary problems 20 years down the road – they care about the things that effect them now. The GOP should have made it quite clear that the promise of Social Security was a sham and that the money that every worker pays into Social Security could be gone in an instant – and that the only way to truly put Social Security into a “lockbox” is to give the individual control.

People want to have control over their lives. They don’t want people to make decisions for you. Fiscal conservatism can have a place in the world of retail politics – it’s all a question of political will.

Frum is right, the current institutional makeup of the Republican Party precludes a renaissance of Reaganite limited government – which is why fiscal conservatives need to subvert the political establishment. Projects like Porkbusters are a start, but that’s not enough to start a mass movement. What needs to happen is an organized campaign to highlight the true personal costs of big government. People don’t respond to facts and figures, they respond to other people. Only once you have that mass movement started will the political culture start adapting to meet their demands.

Is that a realistic scenario? Possibly, but it’s going to require political will, money, and coordination. If the Republicans are to ever return to the true spirit of their party, the impetus must come from the grass roots. The only way to change the course of this party will come from the ground up, and that means making it very clear that the voting behavior of Republican voters will be heavily influenced by a true commitment to fiscal responsibility. It doesn’t take a majority of Republicans to do that, it just takes one more vote than the margin of victory.

There are plenty of Republicans who are upset with the fiscal direction this country has taken – and if they’re willing to speak out and demand more then false obeisance from the GOP, it could make a difference in returning the party to the values it ostensibly stands for.

UPDATE: ABC News has a piece on the rising political cost of pork-barrel spending.

Some Common Sense On Energy

Via Power Line comes some common sense from Republican Congressman Mike Conaway of Texas:

Congress’s actions must be rationally based on economics and the realities of global energy markets. We must not fall into the political trap of knee-jerk reactions that will only worsen our problems.

There is a great hypocrisy in America’s national energy policy. As long as politicians continue to demagogue energy companies and oppose legislation that addresses the long-term problem of rising energy costs, we will continue to fail the American people.

Yes, oil companies are making large sums of money in real dollars; however it is disingenuous to simply look at the raw dollar amounts without looking at these numbers in the proper economic context. We need to look at the percent of return these companies are making. In reality the oil and gas industry’s earnings are easily comparable to other industries and in many cases lower.

According to Business Week and Oil Daily magazines, the oil and natural gas industry earned 5.7 cents for every dollar of sales compared to an average of 5.5 cents for all U.S. industry over the past five years. By contrast in the third quarter of 2005 the pharmaceuticals industry made a profit of 18.6% per dollar of sales versus 7.6% for the oil and gas industry. The average profit per dollar for all US industries is 7.9%. ***

It is time for Congress to look at the facts. It is the global market place and the law of supply and demand, not greedy oil companies that are responsible for higher prices. The price of a barrel of oil is set by the global market not by multinational energy companies. When some in Congress refuse to allow for domestic and deep sea energy exploration that would increase supply and reduce cost, the problems get worse. We must enact legislation that would open ANWR, expand refinery capacity, reduce costly fuel regulation and allow for deep sea exploration. These are long-term issues that could have made a difference today had we avoided political posturing and addressed them years ago. It isn’t too late for us to do the right thing now and begin enacting common sense legislation like increasing supply and increasing research and development regarding alternative sources of energy.

We must stop allowing the issue of rising energy costs to be clouded with misinformation and politically motivated emotion.

Rep. Conaway is exactly right. Congress is pandering, pure and simple, and punishing oil companies for fictional accusations of “price gouging” will only hurt the US energy market. The whole notion is ridiculous – no sane set of oil companies will collude to artificially raise prices when there’s so much economic advantage inherent in being the lowest-cost supplier in the block. Congress’ economic illiteracy will only make matters much, much worse.

Want to lower the cost of energy for the average Americans? Repeal fuel formulation rules, open ANWR to oil exploration, and cut fuel taxes across the board. Want to create shortages and more frustrations? Attack oil companies, keep restricting the development of new domestic oil sources, and increase environmental regulation.

It’s hardly surprising in which direction Congress appears to lean…

Is Peak Oil A Myth?

Ronald Bailey has a good piece in Reason which argues that peak oil is largely mythical – similar predictions have been made for years, and the supply of petroleum hasn’t seem to have peaked quite yet.

For instance, peak oil theorists argue that the Saudis are systematically lying about the capacity of their oilfields, and that the technique of injecting pressurized water into the reservoirs is producing less and less oil as time goes on. However, Bailey notes that the Saudis are spending $100 billion on enhancing their oil capacity over the next few years. That isn’t the action of someone who knows the end is nigh for Saudi crude. Likewise, we’re finding significant new deposits of oil all the time – most recently near Mexico. We can’t estimate when peak oil will hit if we don’t even know how much oil we really have. Proven reserves could be as high as 2 trillion barrels – enough to last for at least a generation with today’s technology.

Efficiency also plays a factor " we do more with a barrel of crude now than we did 20 years ago. Today’s “gas-guzzling” SUV gets the mileage of an efficiency car in the 1970s. There are practical limits to efficiency, but there’s little evidence we’re brushing up against those limits. If anything, as hybrid vehicle technology benefits from increased economies of scale, our consumption of gasoline will likely slow compared to today’s rates of growth. Projections assuming today’s technology persisting into the future are almost certain to be significantly off.

That doesn’t mean we shouldn’t be investigating alternative fuel sources, or conserving fuel as much as possible. What it does mean is that the fear mongers need to be treated with a grain of salt. The worries of “peak oil” have been around for decades, and there’s little solid evidence that supports that contention. What we need to do is continue to increase energy efficiency across the board and allow the market to decide what fuel source works best to replace our dependence on fossil fuels.

Bang For The Buck

Via Instapundit comes an interesting discussion of energy policy and personal behavior. Nick Schultz, writing in Forbes notices that despite increases in gasoline prices over the last few months, people aren’t really changing their behavior that much and despite the increase in gas prices over the long term consumer confidence remains extremely high. Schultz believes he knows why:

The answer might be in some of the long-term trends that the short-term media lens is too cramped to see. Energy prices may be rising, but energy itself is much less important to consumers and to the overall economy than it once was.

According to the Bureau of Economic Affairs ( see chart here), American consumer spending on energy as a fraction of total personal consumption has declined considerably since 1980. Whereas 25 years ago, one in every ten consumer dollars was spent on energy, today it’s one in every 16. In other words, what it takes to heat and cool our homes and drive to and from our jobs and vacation destinations is relatively less costly than it was then.

This goes a long way toward explaining why even when gas prices rise this summer–higher than they were throughout the 1990s–people will still be driving more; it’s much more of a value than it was a generation ago.

What’s more, so-called energy intensity is declining rapidly. That means we produce more with less energy. According to Economy.com, “The U.S. economy has undergone major structural changes over the last two decades, becoming more energy efficient, thus reducing its overall dependence on energy. … The energy intensity of the U.S. economy has declined by roughly 40% since the first oil crisis (as of 2001).”

Reynolds also points to this chart showing inflation-adjusted gas prices over time – while energy costs are high, they’re not as high as they once were, and the amount of production you get per unit of energy has increased since the last major gasoline crisis in the late 1970s.

Alternate energy sources would be nice, but Popular Mechanics has done the real world math and found most of them lacking. It takes one barrel of oil energy to produce roughly 35 barrels of oil " meaning that petroleum is an incredibly energy-efficient fuel source. There isn’t anything we have that’s a realistic substitute for oil. We can make things more and more efficient, but that eventually succumbs to the law of diminishing returns. The one set of laws Congress can’t dick around with are the laws of physics – and those are the ultimate determinant of what works and what doesn’t.

Ultimately, we can’t rely on unrealistic solutions for energy production. Wind, solar, and geothermal production are excellent supplements to our energy supply, but they can’t replace oil. Hydrogen cars aren’t yet practical, but may be some day. Hybrids are becoming more and more practical, but they still don’t make economic sense yet. We can, and should conserve energy wherever possible by shutting off lights, driving sanely, and walking more. But mandating those things on a government level aren’t the right solution.

If anything, government power can make things much worse. Socking oil companies with fines will only reduce refining capacity, which is already dangerously low. Artificially lowering prices will inevitably lead to massive shortages. Continuing to subsidize inefficient methods of energy production takes away from the economic incentive to create efficient ones.

Markets are all about the laws of supply and demand – laws which are designed to deal with situations just like the current energy problem. Allowing the market to come up with the solution rather than overreacting based on fear and temporal political advantage is the smartest course of action – not that such a thing will prevent Congress from doing it.

Oil’s Well That Ends Well?

Just when I think the Republican Congress can’t get any dumber, they do something like this – demanding that the President investigate (nonexistent) “price gouging” by oil companies. It appears as though the Republicans, who should know better, don’t have a clue about the basics of the oil industry.

Oil is at nearly $75/barrel. Our capacity to refine that oil into usable gasoline hasn’t expanded in years, and different states require different formulations of gasoline that further tightens an already iffy supply. This should be basic Economics 101 stuff – the smaller the supply of something, the higher the price. Add to that the rampant speculation going on into oil futures, and you’re going to see gasoline heading northwards of $3/gallon for a lot of people.

Artificially lowering the price of gasoline means that people use more – which leads to shortages and even worse problems than people who feel the need to overcompensate for something with their massive gas-guzzling land whale having to take it in the rear at the pump. Such an effort would lead to the kind of gas lines that we saw in the 1970s. The second Congresscritters think they can control the market is the second that the problem gets infinitely worse. High prices are a signal that supplies are low, and trying to lower prices only reduces supply that much faster – which can soon lead to critical shortages.

This investigation is economically idiotic, but it’s politically stupid as well. There is little to nothing Congress can do about oil prices. The only thing Congress can do in this case is preen in front of the cameras and create a nice kangaroo court for some hapless oil executive. That sort of televised circle jerk will be forgotten soon after, and when the prices continue to go up people will see right through Congress’ cheap pandering.

If Congress wants to really reduce gas prices they could mandate a single formulation of gasoline, expand our refining capacity, and start pushing for increased exploration of domestic oil. All of those things would have the environmental lobby screaming bloody murder, which is why no one in Congress has the guts to do it. Apparently for Congress, it’s much easier to pander to a problem than to solve it.

Chirac Does What The French Do Best

Jacques Chirac, in the true Gallic tradition of running away from the scene of battle has killed the jobs law that sparked violent protests across France for weeks.

This surrender has further legitimized the tactics of the student uprising, ensured that the French economy will remain stagnant, and shown the abject weakness of the government. The continued slide of France into statist collapse is not only ongoing, but it almost certainly just acclerated.

And as tempting as it may be to fall into shadenfruende over the failure of Slick Villy and Co., Michael Barone reminds us that we’re headed in the same direction, albeit much more slowly:

You can quibble about the numbers, but the overall trend is clear: We’re on a collision course. On the one hand, we have a private-sector economy that is vibrant, creative, continually transforming itself and producing millions and millions of new jobs — overcoming the stagflation of the late 1970s, the sharp recession of the early 1980s, the savings and loan bailout of the early 1990s and the trauma of the attacks of Sept. 11, 2001. On the other hand, we have a public sector that is threatening to gobble up more and more of that economy as time goes on.

We know what things look like somewhere down the road: France. As students, union members and public employees riot in the streets against the outrageous notion that people should not be given lifetime jobs until age 26, France seems immobilized…

But at the moment, we don’t have anyone working to stop it — not the Republicans, not the Democrats. In the late 1990s, President Bill Clinton seemed ready to work with Sen. Pat Moynihan to put an investment component in Social Security and with Sen. John Breaux to institute market reforms in Medicare. But Clinton, at the behest of the liberals who rescued him by opposing his impeachment, pulled back, even though the political stars were otherwise aligned.

George W. Bush came to office with plans for market reform in Social Security and health-care finance. But he got only a little of the latter — health savings accounts and demonstration projects in the 2003 Medicare law. On Social Security, he was stymied by united Democratic opposition in 2005.

Barone is right – nobody is taking the problem seriously. The Democrats are hopelessly wedded to the growth of the state. The Republicans are proving to be scarcely better. Medicare, Social Security, and other entitlement programs are a timebomb waiting to go off. There is absolutely no way we can maintain our economic solvency without reforming those programs – but unless the Republican Party grows a pair, the reformist agenda is all but dead. Once again, the interests of the nation are being sacrificed at the altar of political expediency.

The fact is that the same factors that make France the basket case that it is – the sense of institutional entitlement, the immigration problems, the unsustainable social programs, the feckless political leadership, all of those things exist here, just in smaller amounts. However, what is happening in France could most certainly happen here unless we get a leadership that is willing to face the problem head-on and seriously push for reform. Bush has as yet failed to do that, and it seems unlikely that he’ll have the political capital to do so any time soon.

Pulling off the road to serfdom is never an easy thing to do – but if we want to avoid ending up like the French, we had better start changing course now before it becomes even more difficult.

At Least Someone’s Taking A Stand

The editors of RedState single out Congressman Lynn Westmoreland for bucking the House leadership on spending:

On March 14th, aided by 22 Democrats, the Republicans passed a rule for consideration of the emergency spending bill dealing with Iraq, Afghanistan, and hurricane relief. The vote was 218-200. Lynn Westmoreland, along with John Shadegg, Mike Pence, and 25 other Republicans, voted against the rule because, among other things, it failed to offset hurricane relief costs. Leadership had refused to separate out war spending to increase chances of their fiscal recklessness passing.

Westmoreland, along with John Shadegg who was also a deputy whip, was uncerimoniously kicked off the leadership team because, in the words of Roy Blunt, “You need an example every once in a while.”

According to news reports, Westmoreland said he chose principle over the party line. Westmoreland, quoted in Congress Daily AM, said, “I’m not a martyr. You do what you got to do.”

Rep. Westmoreland did the right thing, and the leadership team should be ashamed of themselves. The Republican leadership had damned well better realize that politics as usual isn’t going to fly with the base anymore. Trying to use the cover of our brave men and women overseas for more pork-barrel politics is a deeply disturbing action. Representatives Westmoreland, Pence, Shadegg, and the other dissenting Republicans were willing to put their fiscal principles over political expediency. We need more like them in public service these days.

The European Model That Works

The Brussels Journal has a very interesting and detailed look at the failures of the European social welfare model:

Why is Europe performing so poorly? Europe’s deficient performance is incompatible with its huge potential as the world’s largest single consumer market. Its slow growth contradicts its unequalled industrial productivity and infrastructure, its outstanding education level and labour ethics, its favourable climate, “fair business” morality, and not in the least its tremendous potential provided by the opening of the iron curtain. Obviously Europe’s fairy-tale is not materializing. Nor are the inflated expectations prognosticated by Europe’s political elite at the launch of the Common Currency and the Lisbon Agenda.

The reality of Europe’s ailing economy contrasts sharply with its economic potential and with the massive resources employed to cure its ailing growth. The whole arsenal of Keynesian remedies has now been tried and has failed one by one. Massive deficit spending throughout the eighties and nineties has left Europe with a public debt unequalled in history. The size of Europe’s monumental public debt is only surpassed by the hidden liabilities accumulated in Europe’s shortsighted pay-as-you-go public pension schemes.

The fact remains that what’s happening in Europe right now could very well happen here – in fact, it will unless we start working towards changing our current course. Europe made a very conscious decision to try to create a state based off of certain utopian principles – that economic goods such as health care and housing were “rights” and that the best way to promote a healthy society was to have a more “fair” tax system. Years of massive social welfare spending, confiscatory taxation, and Keynesian economics have failed to produce economic growth or significant prosperity. In fact, with Europe’s unemployment rates in the double digits and their total labor underutilization even double that, it’s quite clear that trying to emulate a European model is trying to emulate failure.

At the same time, one European country does provide a model for how to grow an economy in the 21st Century. Ireland went from being 22nd in the OECD prosperity index to being fourth. The Irish economy has grown at an annualized rate of 5.6% for the past 20 years. Granted, that sort of growth isn’t sustainable over the long term, but in a generation Ireland went from being under conditions that resembled the Third World to being one of the most dynamic countries in the EU.

What did Ireland do? They were the first in Europe to truly embrace globalization. Irish leaders realized that high protective tariffs were stunting economic growth and preventing foreign investment. The Irish government engaged in a policy of free trade, slashed taxes across the board, and worked to attract foreign investment. Ireland also has the benefit of having a large diaspora in the United States – one quarter of US FDI to Europe is invested in Ireland.

Ireland has the exact opposite set of problems as the rest of Europe – Ireland’s population is rising rather than falling, and immigration is still strong. The economic boom has meant that prices on everything from real estate to pints of Guinness have increased dramatically. The Irish economic boom has left government coffers flush with cash – which encourages the kind of spending that isn’t sustainable as the Irish economy completes its transition. Yet for all those problems, it’s far better to have to deal with a rising population and high growth than the opposite.

Ireland’s flat tax structure and pro-growth policies have done better at providing an increased quality of life than the European social model has – and because of Ireland’s economic growth they’re better able to build infrastructure and invest in education, continuing that trend of growth. Policymakers on both sides of the Atlantic need to understand that the quasi-socialist welfare state model doesn’t work. If you want solid economic growth and a better life for your citizens, you must embrace free trade, low taxes, and foreign investment. Ireland’s victory and Europe’s decline are living proof of what it takes to destroy and economy and what it takes to develop one. The question is which model this country will embrace over the next few years and which future we have in store for ourselves.