The hidden side of Ireland's success

Ireland has become the second-richest country in Europe, the foreign
editor of the New York Times, Tom Friedman, told his readers the other
day (1). Admittedly, the front-runner is Luxembourg, and the scale is per
capita GDP, but the prosperity of Ireland is evident everywhere. What
brought about Ireland’s metamorphosis from, in the words of The
, "basket-case to emerald tiger in 10 years"?

Friedman sums it up as a combination of good domestic policies and
openness to globalisation. “Ireland's advice is very simple,” says
Friedman. “Make high school and college education free; make your
corporate taxes low, simple and transparent; actively seek out global
companies; open your economy to competition; speak English; keep your
fiscal house in order; and build a consensus around the whole package
with labor and management -- then hang in there, because there will be
bumps in the road -- and you, too, can become one of the richest
countries in Europe.”

But Friedman, who has become a kind of travelling saleman for
globalisation, ignores the whiplash which comes from accelerating into
the fast lane of the world economy. Many countries look on with some
tinge of envy at the economic statistics of the Irish experience, but
those who know about the limitations of such measures and are not
involved in further boosterism have serious reservations about the
sustainability of this high-risk development policy.

On the plus side is an astonishing growth in employment. Drawn like
moths to a flame by generous tax concessions, a 12.5 per cent corporate
tax rate, and a
young and highly-educated work force, major international corporations
unpacked their bags and settled in. Nine out of the world’s top 10 drug
companies have operation here and 7 out of 10 of the world’s top
software manufacturers. Dell Computers is Ireland’s largest exporter.
Google recently opened its European HQ in Dublin.

But there are negative features as well which are ignored by boosters
of globalisation who pay attention only to economic statistics --
carefully selected statistics, I might add.

The first set of negatives are economic.

Direct foreign investment has served Ireland well. But apart from the
low corporate tax rate, it is based on freedom to repatriate profits
back to the US and relative flexibility in relation to “transfer
pricing”. This refers to creative accountancy practices of corporations
within which a huge amount of economic activity is carried out, and
which allows them to charge subsidiaries in low tax regions high prices
to benefit from the low tax rates. There is something distinctly odd
about prosperity based on another nation’s accounting standards.

Ireland also lacks control over much of key economic activity and the
survival of foreign subsidiaries is dependent on making progress in the
treadmill of competitiveness. Indeed, part of Ireland’s success is due
to its adroit balancing act: European enough to lay claim on European
Union agricultural subsidies and infrastructure investment and American
enough to make the Yanks feel at home in “the 52nd state of the USA”.
We have excelled in exploiting the benefits of the European Union, and
we have very effectively evolved an intermediate role servicing the
needs of US-owned technology and pharmaceutical/health corporations
seeking to expand their operations in Europe. (It is somewhat
embarrassing to acknowledge that a key product contributing to
Ireland’s impressive economic statistics in recent years has been the
production of Viagra.) But as global investors look to Eastern Europe,
India and China, continued growth based in this model is by no means

The on-going benefits to the education system have been mixed as well.
From the 1960s onwards, Ireland invested heavily in education,
initially at secondary level and then by establishing a network of
Institutes of Technology with a mandate to develop courses designed to
serve the needs of industry. Possession of the English language has
been a huge asset in an era when English has become the prime medium of
global communication. But there are fears that the governance of
education could be too closely related to business criteria with a
disastrous loss of academic freedom and critical thinking. The impact
of foreign investment driven growth is not just economic, but cultural.

The boom has had unforeseen consequences on Ireland’s demography. On
the one hand traditionally high rates of emigration have slowly
dramatically because jobs for skilled workers exist at home. In fact
60,000 immigrants are now needed to top up the workforce. Many of these
come from Eastern Europe. Other arrivals are asylum seekers, mainly
from Nigeria. On the
other hand, like other developed countries, the famously high Irish
birth rate has dropped like a stone. In 1965, it was about 4.03
children per woman, well above the replacement rate of 2.1, and the
highest in Europe. As the economy became more modernised, it dropped
steadily until to its current level of about 1.9. (1) Many factors are
at work here, but it is clear that greater prosperity has not supported
Ireland’s traditional family values.

The other, and arguably more important, set of negatives are cultural.

Despite apparent progress in terms of wealth creation, many in Ireland
are increasingly reflecting on the important attributes which we are
losing as a result of the rapid pace of economic growth. High rates of
suicide among young people and the growing abuse of alcohol and drugs
are serious worries for parents.  Ireland’s media has been a
significant driver of corrosive secularisation, which has resulted in
on-going ridicule of Catholicism. A striking feature of the death and
funeral of Pope John Paul II was the hugely reverential treatment by
Murdoch’s Sky channel relative to the Irish media, a media which seems
to be overcrowded with opinion writers working out their own
disenchantments through their columns.

In September 1979, Pope John Paul II made an historic visit to Ireland
which resulted in the largest crowds ever in Irish history gathering
for Mass in various venues. He warned us then in ringing tones: that
“Ireland must choose” and “that something else is needed” (other than
money). In 2004 when we gathered to commemorate the 25th anniversary of
that amazing visit, it was with a tinge of sadness when we realised
that Ireland indeed had indeed made a choice -- and it was often the
wrong one. One of the clear signs of this is the very low attendance of
young Catholics at Mass on Sunday. This is not to say that the
Christian influence in our culture has disappeared: many will
acknowledge that most of the most valuable attributes we have as a
society, such as high levels of voluntary community activity in
Ireland, are derived from our Christian heritage. But our young people
need to be made much more aware of where we have come from. We are a
people who have been severely penalised, historically, for being
Catholic, and now many young people have lost this vital connection
with their ancestors. The rapid economic growth of Ireland has clearly
contributed to this demise.  

Seamus Grimes is a professor of geography at the National University of Ireland in Galway

(1) Tom Friedman. "The End of the Rainbow." New York Times. June 29, 2005.

(2) Population and Labour Force Projections 2006-2036. Central Statistics Office, Government of Ireland.


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