McDonald’s pulled out of Iceland yesterday. This is an enormous moment because it is the first time the McDonald’s machine has admitted defeat in a modern, sophisticated country. A few years ago, this would have been unthinkable.

In the 1990s, when globalisation was in its pomp, a popular expression — coined by Tom Friedman, the ‘New York Times’ columnist — stated that “no two countries with McDonald’s have ever gone to war with each other”. The expression was supposed to mean that globalisation was good for all of us because it civilised us and, what better expression of globalisation than McDonald’s?

Once a McDonald’s opened up in a country, the assumption was that lots of other modern things were going on, such as tolerance and greater interaction with the rest of the world.

It is more than ironic, therefore, that the first country that McDonald’s should pull out of is a country with no army. Iceland contracted out its defence to the US in 1951. The Icelanders concluded that they had no enemies; no one really had any urge to invade them, so why have an army?

McDonald’s announced that it couldn’t make any money because, since the devaluation of the Kroner, the Icelanders have turned back to their local fish and local meats.

McDonald’s, which imports most of its ingredients for its Big Macs, couldn’t survive. It would have to put the price of the Big Mac up too much and the locals weren’t prepared to buy at that price, particularly when local food was much cheaper.

Last March, a restaurateur in Reykjavik predicted to me that this would happen. She ran a fast food fish restaurant down on the docks where huge trawlers came in with their catches. Her restaurant was cheap, her fish was fresh, just out of the freezing North Atlantic and her trade — all locals — was brisk. She said that the Icelanders would abandon the expensive imported food that had become commonplace in the boom, along with the swanky restaurants.

With the currency devalued, it would make no sense to pay through the nose for imported food when the local farming and fishing sectors were offering good food for half nothing. She said that the first industries to boom after the fall in the currency were local agriculture and tourism and as they recovered so, too, would the rest of the country.

This is what is happening and, as she succinctly put it to me, Iceland would, in the future, have “more fishermen and less bankers” and they’d start again. She also made the point that with the worldwide demand for food rising exponentially, fishermen would be better paid than bankers in the years ahead. It was an interesting point.

Five months ago, I visited Iceland to see for myself what was happening. I wanted to see what it felt like to live in a “basket case” economy. Part of the documentary ‘Addicted to Money’ was made in Iceland and I spent a week there chatting to all sorts of people. Back then, it was clear that a new Iceland was emerging where the people — both politicians and bankers — who had mortgaged the country had been kicked out. There was no rescue scheme like NAMA. The Icelanders took their medicine straight away and allowed their currency to fall dramatically. This has been evidently painful for many but as a local policeman suggested to me, “So what if we have fewer Range Rovers and less camembert?”

The economy is now recovering quickly, much more quickly than Ireland. And the devalued currency has a lot to do with that because with a devalued currency local industries can export much more easily and large foreign outfits like McDonald’s are sent packing. In a short period Iceland’s huge trade deficit disappeared. Contrast this with what is happening here.

Back home, last Thursday morning I made a speech in the Four Seasons Hotel in Dublin. In the room next to me, at precisely the same time, Brian Lenihan was addressing the private clients of Goodbody Stockbrokers. By all accounts he spoke well and reassured the private clients that there would be no new taxes — and for that they were clearly grateful. The minister is a good public speaker and I am not surprised that the clients of the stockbroker were happy that they wouldn’t be asked to share too much of the pain.

In the foyer I bumped into a man who imports cars. I asked how his business was doing and he said it was tough but the rising euro was working wonders, because with sterling so cheap he could get great bargains in England and offer luxury BMWs at a much reduced price to those people who still had cash.

This sums up our dilemma. Our currency is wildly overvalued, so some can still spend frivolously on BMWs and think they are getting good value, yet we can’t kick-start our local industries because they can’t compete with our biggest neighbour. So, the car importer stays in business but the small exporter goes out of business.

What type of future is envisaged by the people who make our economic policy and hold the reins of power? Is it one where we become a client state of the ECB, with our grubby hands out for a dig out from Europe via silly class rescue schemes like NAMA? Is it a future where the “protection of the euro” — as the minister constantly refers to it — leaves us enfeebled, with the economic marrow of the country hollowed out by a currency that has risen by 53pc against sterling and a similar amount against the dollar in 10 years?

But as I left the Four Seasons, it struck me. As always in Ireland, economic policy is framed by people who have a stake in society — the insiders. In contrast, the outsiders — people whose toehold in the country is fragile — are sacrificed. The euro protects those who already have wealth by securing their wealth in a hard currency that the economy can’t afford; it is just another mechanism to protect the insiders at the expense of the outsiders.

If you look at what our country does in the face of a crisis, whether it was the 1950s economic crisis or the 1980s emigration fiasco, the pattern is always the same. Instead of paying for the mess they have made, the insiders emerge from the crisis stronger and with a tighter grip on power. The outsiders always suffer. So while in the rest of the world, in countries like Iceland, a crisis causes dramatic change and the insiders pay for their mistakes, here in Ireland the crisis only strengthens the status quo — a status quo, which created the problem in the first place.

Will we ever learn?

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