If you want to understand a country could go from rich to poor within a decade, read this piece on Ireland’s boom and decline. Michael Lewis, the writer of Blindside and Moneyball, has this great Vanity Fair piece that explains how Ireland got caught in a dizzying housing boom which then collapsed suddenly during the 2008 financial crisis. Having been a “poor” country for much of its existence, Ireland saw an economic surge during the 1990s and early 2000s that earned it the fitting moniquet of the Celtic Tiger (Asia had its own Four Tigers which includes Taiwan). This economic growth was driven by heady spending on property construction which eventually totaled 100 billion euros. Despite the obvious absurdity (how much new hotels, office towers and homes could an island nation of under 4.5 million handle?), hardly anybody questioned or checked into how sustainable all this spending was. Meanwhile, an Irish professor who had taken a keen interest in his country’s rampant property price rises and realized it was built on a flimsy foundation, spoke out against it and was roundly ridiculed and condemned. A classic example of trying to ignore wise advice by shouting down those who bring it.
Lewis strikes a sympathetic note with his take on Ireland, maybe a little overly so, portraying even the supposed villains, the politicians and business executives and banks in humbling terms. In complete contrast to the American Wall Street fat cats who were heavily excoriated but walked away from the financial crisis with personal wealth intact, Irish bank heads lost a lot of their own money, having chosen to invest in their own company stocks, the value of which plummeted after the crisis. This doesn’t excuse the “get rich quick” mentality, no matter how driven by honest intentions it may have been, and the politicians and bank officials deserve much scrutiny and criticism for driving their nation into the ground.