The myth of a low-tax economy

Daniel Hannan MEP believes that Joe Higgins MEP, is the most honest man in Ireland...but then that narrative suits him now that the miracle that was the Irish econony of the 1990s & noughties has been exposed a cheap con trick.  I think Barrosso tells it straight here; but that interpretation of Ireland's current woes does not fit Hannan's economic instincts of low tax, free market enterprise.  The truth as BM sees it is that Ireland benefitted from the easy money available to it through being a member of the Euro, enabling it to have infrastructure built funded by (mostly) other European countries whilst at the same time because of the fiscal freedoms the Euro offered, allowing it to entice all sorts of tax evaders (oops, avoiders) to work in the country paying only 12% corporation tax.  I knew very few people who returned to enjoy the  'boom' years who were actually employed - au contraire, they were self-employed.  Why join the PAYE and pay 35% upwards on a sliding scale when you could incorporate and pay only 12?  The cult of the cute hoor is embedded in the Irish psyche and this time, the government was actively encouraging it.  

Over the past 10 years or so, the government began to share some of its largesse from tax receipts with the people and true to its conservative instincts, gave the people the money to spend as they pleased.  Benefits went up,spending on schools and hospitals decreased but that was okay, right ?  People now had the money and could decide where to spend it themselves - the market would take care of the rest.  Until it all came tumbling down...

Maybe in a roundabout way, Hannan's argument is right.  The real lie of a common Eurpean currency was that it was possible to succeed sharing monetary policy only.  The Eurosceptics have always feared a larger plan ie shared fiscal policy and perhaps what we are seeing in the fracture of those weak spendthrift economies is the exposure of the reality that European and Monetary Union can only succeed if there is a common fiscal policy as well.  But I'm not an economist... or a politican...or even a politician's wife anymore so what do I know?  Anyway the clip is short and interesting if only because it reveals a level of exasperation from Barrosso that he usually manages to keep under control.