Category: Archive

Irelandian economics

February 17, 2011

By Staff Reporter

Well, not exactly.
Ireland’s outstanding statistical successes have led to hitherto unimaginable excesses. So while there’s more of everything to spend seemingly endless wads of easy come, easy go euros on, there’s also more reasons to lay awake at night worrying whether or not the whole thing is a dream, a house of cards awaiting the mere touch of an invisible, and decidedly malign, fiscal fingertip.
In the old days — and that’s really just a few years ago — what passed for the study of economics in Irish universities involved a glaring collision between abstract mathematical formulae and the musings of long dead British and European economic thinkers who had “ian” strapped to the ends of their surnames after their deaths.
The study of the Irish economy was a bit of a dead end because, in the greater scheme of things, there simply wasn’t much of an economy to talk about.
Indeed, given what has occurred in the 26 county part of the island in most recent times, there would appear to be a sound basis for the idea that Ireland has only had something that fully fits the definition of an economy for the last ten years or so.
By this definition, economy means a place where the inhabitants have, materially speaking, lots in hand, lots to gain and lots to lose. And the definition can be extended by considering people who don’t actually live in the Republic.
While once the economic state of play was really only an issue for the Irish, now people of any number of nationalities take an interest in the price of a building brick in Ballsbridge.
Many families in the Baltic countries, Eastern Europe, West Africa, and even Britain now depend on income earned by relatives on a small island on Europe’s western edge.
When the stakes become so high in all these regards, people invariably get to analyzing and trying to predict what in the name of demand-pull inflation is going to happen next.
The Celtic Tiger of the late 1990s, and whatever animal fits the bill today, has spawned a new generation of Irish economists reading the economic tea leaves by comparing the once sick man of Europe with long time boom and bust economic heavyweights such as Germany and the United States.
Two of this generation recently visited the U.S., one to promote a new book, the other to speak about a current book and its in-the-works successor.
In both cases, people turned up to listen, fascinated as they were with the story of a onetime economic sinkhole where the dominant ‘e’ word was emigration, not economy, and where the leading ‘i’ word is now immigrant, not insular.

Casting a wary eye
Proof of the growing importance of the Irish economy to the broader world can be found in a line in the press release for Michael O’Sullivan’s new tome, “Ireland and the Global Question.”
The book, according to the release, is “available in North America only.”
O’Sullivan is a graduate of University College Cork and Oxford. He has taught economics at Princeton and is frequently sought out by major U.S. media outlets to explain an economy that so many other nations now want to emulate and imitate.
In his book, O’Sullivan poses the question as to how a small country like Ireland — considered a test case for globalization theory and simultaneously one of the most desirable countries on earth to live in — can maintain independence and meaningful self-governance in the face of the kind of outside forces it must now deal with every day.
According to O’Sullivan, the economic transformation of Ireland from pre-industrial to post-industrial — while largely skipping the industrial middle phase — has gone about as far as it can.
“The easy part is over,” O’Sullivan told the Echo during his U.S. visit. “Now the investment is going elsewhere.”
O’Sullivan is of the view that the current structure of the Irish economy is going to throw up problems. Irish society, he said, had changed, but the question was had it changed at the same pace as the economy. And the answer, he believes, veers towards the negative.
There is, he said, a growing problem of inequality, and while many think that Ireland has long been a bit of a “mammy economy,” in his view, it is still low in real terms when compared to Gross Domestic Product or its bigger relation, Gross National Product.
The “big political project,” said O’Sullivan, is the extent to which the strong economy can be used to benefit society.
O’Sullivan’s book also examines Irish neutrality and how, in his view, it has been “whittled away” while “a more distinctive neutrality and foreign policy” has emerged in its place.
O’Sullivan, who is 35, expounds on the lessons that other countries can glean from Ireland.
The Irish model, he believes, is easy to replicate. Much success can be credited by low corporate taxes and stable institutions.
He defines globalization as the increased interdependence and integration of economies.
“This is the second wave of globalization. The first was 1870-1913. Ireland didn’t benefit from the first wave which was generated by British buccaneer merchants and companies,” he said.
Because the new wave of globalization is American, an independent Ireland is better able to ride on its coattails and, consequently, has been one country that has made a success out of globalization trends.
But, O’Sullivan wonders, has the pendulum swung too much to what he calls the “Anglo Saxon model”? This he defines as too much materialism as opposed to the other things that have made Irish people happy such as family life, jobs and democracy.
“The book tries to answer such questions. Is all this actually good? There is squabbling at the political margins, but a great deal of complacency,” O’Sullivan said.
And O’Sullivan is certainly wary of complacency.
“The stock market bubble in the U.S. five or six years ago was irrational, mad, but it kept going until the boat sank,” he said. With this in mind he believes that a little reining in, coupled with a serious debate about the future would be the best move for Ireland right now.
His book, said O’Sullivan, is a cautionary tale. It tries to bring a sense of perspective gleaned from the lessons learned in other countries.
Does he think there will ever be emigration from Ireland again?
“If you said twenty years ago that there would be someday immigrants in Ireland nobody would have believed you. Saying the same about emigration from Ireland? Well, it is by choice now. But never say never,” he said.
The bottom line?
“My book warns of the need for a sustainable economic base,” he said.

A stern scolding
The question revolving around David McWilliams is if can he maintain a sustainable pace.
While Michael O’Sullivan’s study veers towards the academic, McWilliams, more than any of his peers, has made economics a popular reading subject in the Celtic Tiger and post-Tiger years.
His own Web site points out that he was the first economist to predict the birth of the Tiger. So far, and lucky for its cubs, he has not predicted a de-clawed moggy.
But McWilliams, too, is wary of complacency and the status quo.
His book, “The Pope’s Children,” was the best selling non-fiction book in Ireland last year. It is set for publication in the U.S. later in 2007 and right now he is working on the sequel.
McWilliams is a busy man. He is a broadcaster and columnist, his words appearing in both the Irish Independent and Sunday Business Post.
He likes to chide. “The Pope’s Children,” to exaggerate just a little, is one of those books about everybody that is read by everybody but with every reader believing its criticism applies to everybody else.
On purely economics, McWilliams, who is 40, thinks that Ireland should think in terms of being a medieval city-state like Venice.
This, he told the Echo during a recent U.S. visit, would mean being less involved with the European Union and more aligned with the U.S. and Asia.
Ireland’s European roots, McWilliams believes, are only skin-deep.
“Ireland is culturally closer to the Anglo/American world,” he said.
At the same time, Ireland needs to be much more au fait with China. “There are 130,000 Chinese now working in the Irish economy. The problem with the EU is that Ireland becomes increasingly flat-footed tying itself into an alliance with countries whose populations are falling,” he said.
McWilliams also grates at what he says is the Irish tendency “to ignore the enormous powerhouse that is Irish America.”
Employing economic as his jumping off point, McWilliams has emerged as a wider ranging social commentator. In a recent Independent column he derided the Irish, in other words, all those who might buy his next book, as a nation of adults now behaving like spoilt little children.
At some stage between 1997 and 2007, McWilliams opined, Ireland’s emotional growth rate had become stunted.
“We became obsessed with what others have. Instead of growing up, we reverted back to infancy. Ireland’s adult population is behaving like babies … rather than making us happy, copious cash is making many people insecure.
“We have simply forgotten to grow-up and are caught somewhere between permanent infantilism and adolescence — one second overwhelmingly egocentric, the next desperately wanting to belong.
“This is this psychological challenge for Ireland over the coming decade — and economics is not up to the job. This is a political challenge and what better year to ask the questions then this election year, 2007.”
And what better year to publish a new book about all these challenges?
Michael O’Sullivan’s book, meanwhile, is published by Syracuse University Press at www.SyracuseUniversityPress.syr.edu. David McWilliams’ Web site is www.davidmcwilliams.ie.

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