What Paul Krugman sees in an Irish mirror
Using a research paper by three Irish economists as his springboard, Paul Krugman looks on Ireland's economic crisis in today's New York Times. In the end, the conclusion is foregone:
"What really mattered was free-market fundamentalism. This is what led Ronald Reagan to declare that deregulation would solve the problems of thrift institutions — the actual result was huge losses, followed by a gigantic taxpayer bailout — and Alan Greenspan to insist that the proliferation of derivatives had actually strengthened the financial system. It was largely thanks to this ideology that regulators ignored the mounting risks."
What's needed, says Krugman, is more regulators and an independent agency protecting financial consumers along with "a recognition that letting bankers do what they want is a recipe for disaster." But what's really needed is something else entirely. In the case of Ireland, and maybe the USA as well, what's needed is an acceptance that the biggest problem is one that the regulators cannot regulate, namely decadence. 
All that's required is a reading of another story in another newspaper, the Irish Independent, which is headlined "Dockland chiefs ran up €600,000 travel bill" to make this clear. We're talking about the Dublin Docklands Development Authority and the article contains tasty morsels about its executives running up "A €2,578 bill from the Noble Nest restaurant in St Petersburg featured Bollinger champagne and caviar", while "On another occasion, the DDDA was billed for more than €1,000 worth of tickets to a West End show in London." But it gets even more Neroesque: "Costs of €7,785 were incurred in just one day at Dunbrody Country House Hotel in 2006, while €10,733 was spent in a single day at Marlfield House the following year. Dinner at Marlfield was accompanied by €85 bottles of wine."
Neither Ronald Reagan nor Alan Greenspan can be held responsible for this. We are talking about an atmosphere in which the most rapacious greed was condoned and every decency was abandoned. The shameful, disgusting excesses that marked business life in Ireland over the past decade did not result because there was no independent agency protecting financial consumers or an absence of regulators. In fact, there were regulators a-plenty, but they, too, were part of the crime spree that the country got caught up in.
The easy option is to blame Ronald Reagan and Alan Greenspan. The more painful task to recognize what the mirror really reflects. But because it's too frightening to look at, we blame others.
