The past few weeks have been rather Busy for your humble correspondent, which is not to say that they have been Unpleasant but rather that they have allowed precious little time for reflection and synthesis. I can’t tell when I’ll be able to resume a more regular schedule, but rest assured that I will feel at least some pangs of guilt the next time an evening is spent with America’s Next Top Model on DVR instead of with my Dear Readers.
During one of these recent Busy weeks, I had the pleasure of taking a brief business trip to Dublin, a place I last visited as a student just under a decade ago. It was a treat to be back, not least of all because I now had the novel combination of comfortable lodging and disposable personal income. I realized that this was the first time I had revisited an international travel destination after any meaningful gap, so it was impossible to resist the temptation to compare notes with my memories and seek out familiar streets and sights. I was pleased to have retained enough of a sense of the geography to project that typical city-kid confidence and purpose even in aimless wandering; within an hour of my first adventure outside the hotel, I was asked for directions by American tourists. (My guess would have been correct, but I punted.)
I don’t at all mean to downplay the distinctiveness of Dublin, but my overarching conclusion was that it felt vaguely more “American” than I had remembered. Some of the parallels were superficial and amusing (e.g., gourmet burger franchises, white people with dreadlocks) but others more ominous (e.g., foreclosed houses, moth-balled construction projects). I remember how shocked I and my fellow American students were at the lack of conspicuous obesity that is such a hallmark of travel within the States. Based on my extremely non-scientific observation from a few hours of walking and pubbing, however, I’d posit that the gap has narrowed as the Irish, perhaps, have widened.
And of course there was the economy. During my summer as a student, the Celtic Tiger was somewhat wobbly on the back of the post-Dot Com global contraction (particularly in IT, which had become one of the country’s strengths) but it was still fundamentally sound. Now… well, even the cab drivers wanted to chat about negative home equity. My reception at the border could only have been more palpably chilly if instead of describing my profession as “Finance” I had opted for “Smothering Cute Animals.” Young Americans are often wise to pretend to be Canadian if they happen to be abroad during moments of geopolitical instability. I think from now on I may offer something squishy and believable in lieu of my actual business purpose; aren’t I, after all, part of the new media by virtue of this site?
I haven’t studied Ireland’s public finances (it’s hard enough to analyze enterprises that aren’t run by politicians) but the contours of their situation will be familiar to most observers of the developed world: gross misallocation (in hindsight!) of capital to housing and construction, whose asset values kept rising until they didn’t; insufficient capital to absorb losses at highly-leveraged financial institutions; sudden structural dislocations in labor markets; prohibitively expensive entitlements but no dry powder for countercyclical fiscal policy; etc etc. Some sort of rationalization is inevitable, but I don’t have a view on when or what will trigger it, or how it will play out in practice.
I would, however, caution against counting Ireland out. In my occasional conversations with businesspeople and with Joe Soap (again, an extremely non-scientific set of data) I was struck by how not-angry it seemed that people were about the situation. Their tones were generally sober and pragmatic – certainly not optimistic – but inflected with a sense of collective responsibility. The narrative was not that the country was screwed by, take your pick: greedy bankers, incompetent government, reckless consumers, or some other Other. It was more like that the country had had a grand old bender and now everyone needed to clean themselves up. Assuming that my reading is fair, this wouldn’t change the vast scale of the problems that Ireland (and many of the world’s governments, i.e., people) have ahead, but it would give me more hope that a solution might be reached there before it’s reached in a country where folks take to the barricades to protect the social entitlements that they refuse to pay for.
Slogans and economic dogma aren’t going to fix the massive structural problems with the world’s economies. Patience, pragmatism, and a sense of collective responsibility, however, seem like constructive places to start.