Sunday, 8 March 2009

Did Ireland really have an 'economic miracle'?

Ireland’s economic collapse is very real, and it’s going to get a lot worse before it gets better. This development has been greeted with a certain amount of schadenfreude in some elements of the UK press and amongst the mandarins in Brussels. And I can understand that. We got a bit beyond ourselves, and having fed from the European trough for years, got up their noses, once we got wealthy, by declaring ourselves closer to Boston that Berlin and by rejecting the Lisbon Treaty. We’ve now dusted down the begging bowl and are headed for Brussels/Berlin for another ‘dig out’.

The schadenfreude has been accompanied by comment to the effect that Ireland never really had an economic miracle, that it was all a puff of smoke like Iceland’s. Now I've been flagging our bust for several years (and for over two years on this blog) long before it dawned on the ‘professionals’ or luminaries like Peter Sutherland (see my post here).

But Ireland did have a real economic miracle (unlike Iceland, where the 'miracle' was really an illusion created by massive bank borrowing ***). It’s just that we blew it. How we did that is a story for another day.

Bear in mind that in the mid-eighties Ireland was a poverty-stricken, priest-ridden (in every sense) basket case. I think everyone knows how bad it was. But by around 2003/2004 we had, by dint of massive export-lead growth, mostly in high-end manufacturing and technology products and services, been transformed - economically and culturally. Productivity expanded continuously for over 25 years, ICT exports regularly exceeded €50 billion annually, and we actually produced more STE (science, technology and engineering) graduates than Germany at one stage. All from a population of less than four million.

Ireland produced a whole range of world-beating companies, mainly in the IT arena, in areas like electronic payments, e-learning, public key infrastructure (PKI) and mobile communications, to name just a few, while professional services firms like ESBI were as good as you’d get anywhere. We were the world’s second largest software exporter for a while, and according to the National Science Foundation in Washington, were the world’s top foreign affiliates conducting R&D. Not sure if it still apples, but up to recently Irish-owned companies in the US employed more people than US-owned companies in Ireland.

Our per-capita GNP was constantly in the top half dozen countries for years (enhanced somewhat, but not critically, by imaginative accounting practices by multinationals based here)

Broadening the scope of achievement somewhat, as recently has last year Ireland surpassed every other country in the world apart from Norway, Australia, Canada and Iceland on the UN’s Human Development Index (HDI). This measures a whole range of statistics covering health, wealth, societal participation and literacy. A study by The Economist a few years back deemed Ireland to be the best country in the world in which to live and work.

Sorry, these are not trivial accomplishments. They’re real. Which is all the greater pity that we’ve allowed them to be disastrously undermined through greed and incompetence over a few short years.

Yes, Paddy has royally screwed up, and we’re out with the begging bowl again. But don’t let anyway say that Paddy didn’t achieve a remarkable transformation over twenty years. There really was a genuine Celtic Tiger. It's just that we let it die from neglect.

*** PS - let me say I have great admiration for Iceland, a plucky and hard-working people who have achieved an immense amount despite much adversity. But their recent 'miracle' was really a Ponzi scheme fueled by speculation.


Anonymous said...

If Ireland's economic miracle was based on the ability to make and sell high tech stuff as much as you say it was then the future will be tough but you will survive. I hope you do.

PS. Has a massive increase Public Sector spending been predicated on Private Sector success until the former throttled the latter?

Anonymous said...

nice post savant . in my humble opinion , the Celtic tiger died in that little slump after 911 , yea we kept creating jobs , but they weren't really good jobs ,lots of services type stuff ! while 100,000 manufacturing jobs quietly left Ireland for the east EU , salary's were stalled or were canceled out by price rises ( greed) as for the whole quality of life thing , i am sorry to say it but in many ways we are worse off ! have you noticed the amount of rubbish just dumped in the streets , the unstoppable rising tide of scum ! the completely changed face of our once homogenized little nation , all in just a few short yrs , the homeless dying in the streets while 250.000 housing units are lying empty ! the next few yrs are going to be a chastening experience for us all , and on a final note ,we don't have a government to get us out of it .

We're Fucked .

SAVANT said...

Without doubt the growth in public spending (the single biggest problem) was based on the assumption that the private sector would continue to feed the beast.

Re the future, I hope you're right but I'm more inclined to the pessimistic view of the second commentator. Mainly because our government just doent have the balls to do what must be done.

Anonymous said...

makes it all the harder to take now that we've blown it.

Viking said...

we're all unemployed again - but at least we are living in nicer houses!

the boom tidied the place up a bit and modernised the country, but now a lot of people I know are unemployed or heading that way, with huge mortgages on houses that aren't worth anything like what they paid for them.

Anonymous said...

Don't worry - you're in the same leaking boat as the US! And we've just elected the dusky cabin boy to be Captain! Rought seas ahoy!

Johan Potgieter

clonycavan said...

Yes there have been achievements, and we should be proud of them. We take almost for granted our rule of law, fair and uncorrupt public services), and incorruptable judiciary but many countries don't have these things;our social cohesion,egalitarianism and the far-sighted investment in education for all. And our independence; a remarkable achievement.

clonycavan said...

But hubris was at work. The boom, when at last it came, was mismanaged.
Our government, lacking leadership itself, imported advice uncritically from international 'experts'. 'I'd like to give the world...a job' became our national mission statement. No sooner had we made the Irish nation state function, than we turned it into an international entrepot port of leaving and arriving people and companies.
No alarm bells went off when between 2000 and 2006 the number of people working in internationally traded goods and services FELL. Until 2008 the number of people employed, using borrowed money largely, ROSE. Legal aid was dispensed in millions to non-nationals to challenge government decisions, and enormously expensive Tribunals raked over the peccadilloes of a former generation of politicians (to no discernable good)while, overlooked, the golden circles helped themselves to debts so large, they had to become our national debt.
Nice post, Savant. How badly we need that cleansing hellfire.

Viking said...


thanks for that comment!

I laughed so hard I spilled my beer

Anonymous said...

But Sav. You appear to be leaving one significant consideration out of this equation.

Because even you must surely admit that our “much respected” Govt., not to mention the PC Militia would never renege upon the boundless "ENRICHMENT" they promised us would most definitely flow-- like milk and honey-- from our rapid plunge into the Multi-Culture.
Sure all we have to do is remember that this "Richness” is freely on stream for all us “Old Irish” courtesy of "The New Irish" , and fair play to them they are indeed giving it to us at a time when its most needed.

As somebody who was recently made redundant I can tell you that I for one, have taken to watching the post every morning anticipating its much heralded arrival, as I am at this stage depending on it to pay the mortgage, the Electricity & Gas bills, dropping through the letter box as it will, in some nice rose-coloured envelope.
It will be just like winning the Lotto.

And if my own share of ENRICHMENT turns out to be half as good as they forecasted, sure it’s bound to be a great improvement on the auld dole itself.
So I can tell you that these days I for one am desperately on the look-out for my share in the ENRICHMENT programme
(Ah f*&k it, maybe it will come tomorrow. Rome was not built in a day!
I’ll say a prayer to St. Jude, and failing that I’ll have a word with that auld mullah with the turban.
Mind there was that Nigerian taxi driver who was saying something something the other day about the millions he had ALREADY and only needed my bank account details to pass it on to somebody like myself.
Perhaps that’s they way they distribute the ENRICHMENT.

Yours in hope

SAVANT said...

John Joe. I NEVER said that collection of wankers, a.k.a. our government, was or is 'highly respected'. The country's achievements were.

Sorry about the job situation, genuinely. In a sense I was looking forward to the cleansing hellfire, but too many friends have fallen into the chasm and it's having a very depressing effect on me. I ca imagine the impact on them/you.