Calling a Shamrock a Shamrock

Howard Rich
Rasmussen Reports

As the European economy grapples with yet another bailout of a bankrupt sovereign state, a storyline is emerging that seeks to frame this latest instance of government interventionism along deliberately disingenuous lines. According to this misleading narrative, Ireland’s abysmal fiscal condition did not come as a result of chronic state overspending, but is instead due to the island nation’s comparatively-low corporate income tax rate.

Sound like a familiar song? On both sides of the ocean there appear to be plenty of Keynesian apologists who believe that economic downturns are always caused by greedy capitalists – never by greedy politicians and government bureaucrats.

Now several European nations – led by France and Germany – are insisting that Ireland raise its 12.5 percent corporate tax rate as a prerequisite for receiving a Eurozone loan that would pump tens of billions of Euros into its banking system. Such a tax increase aims to bring Ireland in line with corporate tax rates in France (33 percent) Germany (30 percent), Spain (30 percent) and Great Britain (28 percent) – but it would also stifle productivity and job growth at a time when Irish citizens need their economy to be firing on all cylinders.

Read the rest at Rasmussen Reports.

Update: Headlines from Instapundit on 11/26/2010:

TELEGRAPH: EU rescue costs start to threaten Germany itself. “Germany cannot keep paying for bail-outs without going bankrupt itself.”

UPDATE: Tyler Cowen: “In a nutshell, we’re watching the most pitched, highest-stakes, most determined battle between politics and finance which has been staged. I am expecting finance to win.”

ANOTHER UPDATE: More from Arnold Kling. “The question is whether the Eurocrats can beat back the speculators. I find the whole situation much too complex. I can only come up with a list of things that I wish I knew.”

MORE: Euro-Zone Debt Crisis Escalates.

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