The Irish exception

In some circles (such as on the pages of the National Post), whenever the virtues of the Nordic model are cited, a standard riposte is "What about Ireland?"

Well, indeed. When I was putting together the graphs for this post, I found that Ireland was quite literally off the chart.

 

Here are the graphs from that post (with the original least-squares fitted regression line), with Ireland included:

It's pretty clear that the Irish have made quite different political choices than have been made by the Nordic countries: social spending as a percentage of GDP is less than in the US. But the Irish experience doesn't really provide an alternative economic model. It has lower corporate taxes, higher consumption taxes, and higher income tax rates than what we have in Canada - just as the Nordic countries do.

Comments

[thwap]

So, what are you saying?

[Stephen Gordon]

That when it comes to tax policy, Ireland is not an exception: they're using the same pro-growth tax mix as the Nordic countries.

[Tom Geraghty]

What if you look at Irish social spending as a percentage of GNP rather than GDP, which is inflated because of the presence of so many multinationals? I'd bet then it doesn't look so different from the rest of Europe. At least it wouldn't be so far off the charts, anyway.