While one handful of John Brown University students are in Ireland studying its history and culture, another group of students back in Arkansas got a taste of Irish economics Monday night.
Guest lecturer and Irishman Patrick “Paddy” Roche was born in Dublin in 1940.
“I’ll let you do the math,” said Billy Stevenson, instructor of intercultural studies, as he introduced Roche, eliciting chuckles from the crowd and especially Roche himself.
Roche studied politics and economics at Trinity University in Dublin and political philosophy at the University of Durham. He then returned to Northern Ireland to teach at the University of Ulster and Irish Baptist College. Currently, Roche is a professor in the John Brown University Irish Studies program, where he teaches a course on Irish economics and society.
“[Roche] spent a number of years really at the center of northern Irish politics,” said Stevenson.
Roche was elected as a Member in the Northern Ireland Parliament in 1998 and was ultimately a deputy leader in the Northern Ireland Unionist Party for several years, after they split off from the UK Unionist Party.
Supported by Roche’s extensive background in Irish and European politics, Monday evening’s lecture was to a roomful of students and faculty over what he called The Euro Crisis: Origins, Economic Policy and Politics.
Roche compared characteristics of two groups in the European Union. One, the “PIIGS,” is an acronym describing the countries of Portugal, Italy, Ireland, Greece and Spain. The other, one he called the “Core EU,” is most powerfully characterized by Germany, but also includes countries like France, the United Kingdom and the United States.
Roche described the Euro Crisis that hit in the early 2000s as being mainly caused by two phenomena. First are the issues of excess bank lending and the government bailout of overextended banks. Secondly is the superior competiveness of the German economy compared to the uncompetitive PIIGS economies in respect to their intra-EU trade deficits.
Between the two of these, problems began to spring up as the Euro was adopted as currency for many European countries.
For example, Roche described how economically speaking it is appropriate for the burgeoning economy in Germany to have low interest rates on bonds and other investments. Therefore, in 2001 the European Central Bank set interest rates at a reasonable amount for countries such as Germany.
However, less thriving countries such as Ireland, which still use the Euro but have different interest rate risks and needs, nevertheless had the same interest rate as countries like Germany. This fact encouraged excessive lending by the Irish banks, which led to excessive borrowing by Irish citizens and created a sizable property boom.
When one looks at the effects on Ireland and the other PIIGS, such as Greece, it quickly becomes clear how the issues of excess bank lending and lack of ability for economic competitiveness in the European Union has caused major monetary challenges over the years.
These struggles have also impacted politics in the countries and caused major discussions of policy responses and the effectiveness of bailout strategies.
Mike Kennelley, associate professor of business, took a group of the University’s graduate students to Ireland about 10 years ago. He remembers standing at the top of a tall building and seeing construction everywhere he looked. He realizes now that was part of the “Celtic Tiger” and the housing boom that so drastically affected Ireland’s economy.
“It was interesting that Roche spoke about how they do not have control over interest rates, and all the problems that has caused,” said Kenelley.
Randall Waldron, professor of economics and international business, offered bonus points to his students if they attended the lecture and turned in a worksheet on the talk.
Junior Nick Kopp is in Waldron’s Microeconomics course and attended the event. He said he did not know much about the Euro Crisis before he came, but what he did know told him it was a bad situation.
“I found it interesting how the European Union thinks so differently than the United States, especially about economic policy,” Kopp said.
Sam Dinger is a senior majoring in Business Administration and minoring in French. He enjoys economics and stays informed through various media outlets. He found it interesting to compare the economic situation of China, who has been deliberately devaluing their currency to lower the cost of exports, with countries like Ireland, who struggle to remain competitive because of their valuable currency.
At the same time, Dinger felt like Roche’s talk was condensed and approachable.
“I felt like I could understand it,” he said. “There is not a steep learning curve to have the basics for a discussion like this.”