To save Ireland's economy, we must destroy Ireland's economy?

Over the last three years you may have heard people say that Ireland's economy has to be restructured, that we are living beyond our means. Brian Lenihan, channelling his inner Haughey, stated in 2008:

To make yourself competitive in the wider world, you do sometimes have to take a reduction in your current standard of living. I am not trying to reduce investment in this economy, but I am saying to people that we are living beyond our means.

Since then, we have had further reductions in incomes and welfare has been cut. Average weekly paid hours for all employees had declined from 32.7 hours in early 2008 to 30.9 in early 2010 (CSO). Yet we are told repeatedly that reductions in wages and the number of hours worked is part of "expansionary fiscal contractions". The IMF itself recognises that when this was tried in Ireland is the late 1980s, it only worked because of external investment.

The backdrop for the launch of the four year plan on November 24 was Securing Ireland's Future. Securing our futures, as communities and in families, means taking reductions in wages and increasing service levies. Productivity does not depend on hours worked alone but also on available capital. But are we not broke, as a country? How can we invest in an economy when we have no money to spend? We never hear about how government and private investment produces a return.

Instead, we are asked to cut in order to grow.