Alter mindset to secure a grown-up economy

Fortitudine Vincimus is the family motto of the Irish explorer Ernest Shackleton, meaning “by endurance we conquer”. The architects of the euro should consider stamping it on every coin they produce.

Over the last four years, we have witnessed a sustained and virulent assault on the entire euro project by forces within and outside the eurozone. Inside, an army of politicians, academics, and various media organs have advocated the collapse of the system. Outside, financial and institutional forces have pursued a self-interest campaign to undermine the fabric of the single currency. We have come close a number of times to capitulation in the face of this wave of opposition. If that had succeeded, the eurozone, and Ireland in particular, would have been pitched in to an economic and financial crisis far worse than the one being endured presently.

Over the past weekend, a number of highly influential commentators from global investment banks Goldman Sachs and Morgan Stanley have acknowledged huge adjustments under way that have radically changed prospects for the single currency. These changes stem from two primary drivers: (1) The ECB under Mario Draghi has shown itself to be a forceful and innovative defender of the single currency. Draghi’s leadership and pursuit of game-changing policies has hunted the bears out of Eurobond markets, and; (2) major structural changes are taking place in the peripheral European economies.

The latter is probably the most revealing piece of the euro’s existence in the past few years. When the single currency was launched in 1999, every dog in the street knew that economic management in core Europe was far more disciplined than around its fringes. If attempts had been made then to force through the needed changes in fiscal management that are now under way in peripheral Europe, a democratic revolt would have stopped it and the euro’s creation. Now, radical changes are taking place in the way economies are managed in Greece, Portugal, Spain, Italy, and — yes — Ireland too. These are being conducted under the umbrella of a severe financial crisis but will ultimately help create a more level playing field across the entire eurozone economy.

All of this is good news. In Ireland we have for too long lived in a culture where scams such as pulling sickies and gaming the system have been embedded in the way many of us work. If we want the benefits of the euro (stable pricing, low interest rates, a massive internal market) it is essential that we accept the rigours of a modern, grown-up economy. That means we balance our books more often, limit the amount of debt that the State or its citizens incur, and we stop practices that flagrantly absorb taxpayers’ money through the cute hoorism that often defines Ireland’s labour market.

The prize for exchanging our past economic infrastructure for something that is more efficient and honest is huge. Ireland already scores highly on many metrics that define global competitiveness, including foreign investment, competition law, and competitively priced and qualified labour.

By creating an economy where honesty and integrity define our banking, public, and private sector markets, we can share in the recovery that may now unfold.

If the eurozone shows the world what a rich and deep market it can be once needed reforms are accomplished then Ireland is poised to benefit.

The stepping stones on this journey include: (1) Further structural changes that bring annual spending and tax income in line; (2) the emergence of Ireland from Troikaland, and; (3) stabilisation and gradual recovery in our banks and their lending volumes. Trends such as these, in Ireland and across Europe, will help banish the euro bears.