Business Irish

Monday 18 February 2019

Nobel economist Stiglitz: 'I'm astonished at Irish ability to suck up austerity pain'

Nobel prize-winning economist, Prof Joseph Stiglitz. Photo: Bloomberg News
Nobel prize-winning economist, Prof Joseph Stiglitz. Photo: Bloomberg News

Ailish O'Hora

NOBEL-winning economist Joseph Stiglitz has described the Irish ability to suck up pain associated with austerity as 'astonishing'.

And he described our ability to deal with the pain without taking to the streets and rioting like our neighbours in southern Europe as akin to religious ideology.

"It's like a view that you have sinned, Greece has sinned - redemption through pain. It's almost a religious notion that if you sinned so badly, you have to feel the pain to get redemption," he told RTE's Morning Ireland in an interview.

He said the notion of taking billions out on economy in austerity budgets, as has happened here, was 'totally absurd' and that economists know it does not work.

"Why that was not understood by European leaders was beyond me."

Columbia Uniiversity Professor Stiglitz has never been a fan of austerity and the former chief economist at the World Bank has voiced his views in the past but he said Ireland will recover.

While Ireland will recover, he said, it will not be back to the growth path we were on before the economy tanked.

"Yes you will get back to where you were...but it will be a lost decade, at least, I think that's the reality that Europe needs to wake-up to."

And he reiterated his theory that bondholders should have been burned during the bank bailout instead of laying the responsibility at the hands of taxpayers when €60bn was pumped into the Irish financial system.

"The first mistake was to make citizens pay for it. The bondholders - in a conventional bankruptcy if you are the owner of a firm that goes bankrupt you suffer.

"You get the upside in capitalism and you get the downside.

"The European Central Bank and others in Europe wanted to save the banks and the other investors in Europe......So it was really a trade off between banks all over Europe and Irish citizens.

"It was Irish citizens not so much bailing out the economy as bailing out the bondholders."

Ailish O'Hora

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