The Irish economy looks set to become an issue in the American presidential election in 2012 with competing visions of how austerity is working in the Irish economy.

The right-leaning Wall Street Journal has carried a series of articles pointing to Ireland’s improved economic figures and pointing out that austerity is working there.

However liberal economists such as The New York Times columnist Paul Krugman disagree with that analysis saying reports of an Irish recovery are way overblown,

The latest Wall Street Journal article was the influential ‘Heard on the Street’ column by Richard Barley on Friday which stated boldly;

“Austerity works—or at least, it is working in Ireland. The country's bonds now yield less than when Dublin received a €85 billion ($115.57 billion) bailout in November 2010, despite the escalation in the euro-zone debt crisis since the summer. That offers a flicker of hope. If the economy continues to perform, fears of a Greek-style debt restructuring will continue to recede, ultimately allowing Ireland to start issuing bonds again.”...

The article concludes that “a return to markets as early as 2012, which may be possible, would send a powerful signal—about Ireland and the euro zone.”

Paul Krugman strongly disagrees, Writing in his blog the Nobel Economics laureate states that “There’s a visible push to claim that recent Irish experience — somewhat better-than-expected growth in the second quarter, rising exports — vindicates austerity policies. “

He continues “So, some cold water.... Ireland is “doing a little better than expected It’s achieving a significant amount of “internal devaluation” via deflation, which is leading investors to mark up the possibility that it might actually avoid default...
…. eventual recovery after years of Depression-level unemployment is a strange definition of success... “ Krugman says.

It seems only a matter of time given the Wall Street Journal preoccupation with Ireland these days and its' key role as a feeding agent for Republican talking points that some Republicans on the stump or in the debates point to Ireland as an example of what their austerity directed policies can bring about.

That is sure to cause a rejoinder on the other side and then let the debate begun with Ireland as Exhibit A.