An indubitable Airmiles classic :
There is a huge debate roiling in Europe today over which economic model to follow: the Franco-German shorter-workweek-six-weeks’-vacation-never-fire-anyone-but-high-unemployment social model or the less protected but more innovative, high-employment Anglo-Saxon model preferred by Britain, Ireland and Eastern Europe. It is obvious to me that the Irish-British model is the way of the future, and the only question is when Germany and France will face reality: either they become Ireland or they become museums. That is their real choice over the next few years – it’s either the leprechaun way or the Louvre.
Now those familiar with leprechauns will recall that they’re untrustworthy little bastards, inclined to evaporate along with the pot of gold when given half a chance. The same is true of dodgy generalizations constructed around trite metaphors, especially when they’re employed by someone who clearly doesn’t know what he’s talking about. We’ll leave aside the basic claim that a small post-industrial economy provides the right model for two largish economies with large industrial bases, and concentrate on the glaring material errors in Friedman’s account. Point One: Ireland is not an exemplar of the “Anglo Saxon model.” For evidence, take a look at this recent paper by Lane Kenworthy, which argues convincingly that Ireland doesn’t fit well into either the Anglo-Saxon ‘liberal market economy’ or Rhenish ‘coordinated model economy’ models. Point Two: Ireland is an especially poor fit with the Anglo-Saxon model in the area of labour market policy, a fact which rather undercuts the argument Friedman is trying to make. Again, Dr. Kenworthy:
beginning in the late 1980s and continuing throughout the 1990s, [Ireland] has had a highly coordinated system of wage setting (Baccaro and Simoni 2004). In addition, Ireland has higher levels of employment and unemployment protection than other liberal market economies and longer median job tenure (Estevez-Abe et al. 2001, pp. 165, 168, 170).
Finally, there’s a very strong argument to be made that it is exactly the non-Anglo-Saxon features of the Irish economy – and in particular the systematized concertation between trade unions, management, government and other social actors – that was at the heart of Ireland’s economic success in the 1990’s. This system, unbeloved of free market economists, set the broad parameters for wage and income tax policy, and provided Ireland with the necessary stability for economic growth. It’s now coming under strain thanks to growing inequality in Irish society, but that’s another story. As already noted, Ireland isn’t necessarily the best example for big industrial economies to follow; but insofar as it does set an example, it isn’t the kind of example that Friedman thinks it is.