It's not too late. The request for aid may have been made. The negotiations may have started. But Taoiseach Brian Cowen can still refuse a bailout from the EU and the IMF.

It might sound like madness for a drowning man to refuse a life belt. But the decision the Irish make in the next few days will shape the future of the nation for a generation.

Ireland would be better off going bust than taking a loan. The conditions attached to a rescue aren't worth it: Once it takes EU money, it will never get off the hook. And the Irish banks aren't worth saving anyway. The question is, do Ireland's politicians have the courage to default?

Last weekend, Ireland surrendered to pressure to accept an EU- and IMF-led package. There was no surprise about that. The markets had grown so nervous about Ireland's finances and the cost of its bank bailouts that yields on 10-year government debt reached almost 9%.

The final amount of the bailout is still to be determined. So are the terms. This means it isn't too late. The deal may still fall through, particularly with a general election looming. True, that would cause chaos in the bond markets. But the Irish should still say no. Here's why.

First, the conditions are too onerous. The EU may demand an end to Ireland's low corporate tax rate, even if it isn't explicitly part of the rescue deal. It will be hard to explain to businesses in Dusseldorf why their high taxes are being used to help rescue competitors in Donegal. But raising the corporate tax rate would be a huge mistake. Low taxes and an open business culture are what made Ireland successful. You don't cure a sick patient by taking out a lung.

Second, the EU-IMF rescue looks like financial methadone. It numbs the pain and gets you off drugs, but it's addictive. The cure can be worse than the disease. Months have passed since the Greek bailout, and there isn't much sign of Greece accessing the capital markets. The yield on Greek bonds remains above 11%. It's a 'Hotel California' package: you can check out any time you like, but you can never leave.

Third, this is mostly about rescuing EU financial institutions. If the Irish banks go down, it will cause massive losses at other European lenders. But why should Irish people worry about that? If French, German or British banks suffer big write-downs, let their governments deal with them. Ireland could just close its banks – such a small country doesn't need its own finance industry any more than it needs its own car makers.

Fourth, Ireland risks tipping into an economic spiral. A key to the Irish economic revival of the past 20 years was reversing emigration. But a generation saddled with these debts may move to London or New York where the prospects are better. It's already happening: emigration is exceeding immigration for the first time since 1995. It will be the most highly skilled, energetic people who leave. How is that going to help Ireland recover?

Five, going bust isn't so bad. Russia and Argentina defaulted. It wasn't the end of the world. The financial markets portray it as a catastrophe, but that is because bankers and bond investors stand to lose a lot of money. If it is done in an orderly way, a default is often the best solution to a financial mess.

Underneath the property bubble, Ireland has a competitive, export-oriented economy. September figures show exports rose 2% and the trade surplus increased. In a weak global economy, that's a very decent performance. If it defaults, Ireland can bounce back fairly quickly. If it takes a bailout, it will be stuck in recession for a generation.

Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.