Review: When the luck of the Irish ran out

The best histories are not of the distant past, but of the things that have happened in my own lifetime, when -- being only one person – I could not have kept track of everything else going on in the world. 

Having worked with Irish ESL teachers in Korea, I bought this book when it came out in 2010. It detailed Ireland's rise from economic backwardness to the "Celtic Tiger" before declining in the Great Recession.

Lynch's book charts Ireland's experience leading up to the Great Recession by focusing on five individuals:

• Jack Byrne, an I.T. specialist
• Linda O'Shea Farren, an attorney and government official in the "Rainbow coalition"
• Roddy Doyle, award-winning author and playwright
• Sean Fitzpatrick, the head of Anglo Irish Bank (AIB), and
• Bertie Ahern, the Taoiseach (prime minister) of Ireland

Up until the 1980s, Ireland was a near-theocratic Catholic nation with high unemployment, poor telephone infrastructure. Its best and brightest young people fled the island in search of better opportunities, and rarely returned.

Things started to change when the Fianna Fail political party brokered a deal with labor unions and businesses to foster a better economic climate. At the same time, the Catholic Church lost some of its social and political influence, and Ireland benefited from such prominent pop culture successes as U2 and Riverdance.

The well-educated, English-speaking, low cost workforce attracted foreign investment. Businesses that wanted to establish a business foothold Common Market set up operations in Ireland, and things took off in the 1990s. When they joined the euro-zone, though, things started to get out of hand. First, adopting the euro meant they had to accept the interest rate set for the entire euro zone. Ireland economy was already doing well at the time, so this meant accepting a lower interest rate than that which was good for the country. It was akin to throwing gasoline onto an already existing fire.

Then, like in the United States, banks started to make poor lending choices and the government failed to step in and properly regulate the banking industry. Loans could be secured for 100% of a property's value. Capital reserve limits were ignored, and the government kept in place tax incentives for construction, even when they were clearly distorting markets.

Anglo-Irish Bank did very well while property values were constantly rising, but then the economy started to slow down.

When the housing bubble popped in the United States in 2007, AIB collapsed. The government nationalized it in 2009, and Fitzpatrick went bankrupt. Bertie Ahern's shady finances and public intransigence (Cash gifts because he didn't have a bank account in his name?) led to his resignation in 2008. And Byrne lost his job at AOL.

In February 2010, the new Taoiseach Brian Cowen said, "By some estimates it will take until between 2021 and 2026 for Ireland to regain its 2007 level of output."

Fortunately, that has not been the case, as Ireland surpassed its 2007 GDP per capita in 2015, but the risky behaviors people adopt when they "lose the run of themselves" remains clear.

Although the timelines can be a little hard to follow, Lynch's book is a forceful reminder that prosperity never lasts long enough. And though it's been 10 years since the book's publication in the worst days of the Great Recession's, my own experience suggests we'll likely be dealing with the fallout from the present-day COVID19 pandemic for years to come, too.