Ireland – A nation of economic Bourbons?

This is an edited and extended version of a column in the Irish Examiner 30 November 2013.

Dupray-Charles_Maurice_de_Talleyrand-Perigord Tallyrand, the great French statesman and survivor, declared on its restoration that the House of Bourbon “had forgotten nothing and learned nothing” . He referred to the reflexive actions of the new King towards autocracy and revenge. In many ways, the Irish  are economic bourbons – we remember nothing and we forget nothing. We don’t learn from history in  Ireland. Part of the problem is that we perhaps have too much history. There is always an exception, some time that if not different was not quite the same to allow us the out of saying “ah, but this time its different”. From there it’s a short drive turning a corner, carefully not driving over the green shoots to see sound fundamentals and away we go.

De-Valera_Chief_960_2The great economic historian Cormac O’Grada noted in 2011 that this crisis was the fifth major episode of emigration in the history of the state. If we add in the Civil War, that’s one every 14 years, or 1.5 per generation. This is probably a world record for crises.   Lets look at these and see what we can learn. In the 1930s we had a crisis when DeValera, in what I can only think of as an act of economic lunacy declared an economic war with the UK, our then vastly predominate trading partner. Leaving aside the rights and wrongs, the economic war only ended when it became an irritant to the UK in their need to focus on the immanent existential threat of Nazi Germany. Throughout the Second World War the small, import substituting industrial companies encouraged by Dev as part of his drive towards autarky, a sort of 1930s North Korea with priests, were hammered badly. By comparison other neutrals enjoyed commodity booms. We managed to lag the other neutrals by a considerable margin before, during and after the war, in terms of growth. We exported people and cattle, usually in the same boats. The 1950s, dominated by DeValera again, were a grim decade, with declining population and falling living standards. It took decades of hard work to turn the country to a paying proposition and then in the 1970s the weak government of Garret Fitzgerald followed by the Trimalchian banquet of Haughey increased the national debt tenfold in the 1972-82 period. In some ways Haugheys ‘L’etat, cest Moi’ approach to money echoed the mysterious conversion of bonds raised overseas in the 1916-21 period for the state into shares held by Eamonn DeValera in his own private newspaper. In the 1970s and 80s in particular of course we also renewed our love affair with exporting live cattle to Libya and people to anywhere which would take them legally or no. The hard work of the 1990s was of course blown to pieces by the collective folly of the credit boom followed by the Masque of the Red Death that was the fumbled bumble of the Cowan governments decline into national bankruptcy.

debtgdp

Theres a broad thread running through this. It is Fianna Fail. This is not to say that FF are historys most evil monsters. They are not, they are a party that is as perfectly evolved to populist democracy as a great white shark is to devouring anything it can. Democratic to its very core, they time and again hold up a mirror to the Irish electorate ,and get elected. Usually this ends badly, as the nature of democracy is for people to vote for jam today and tomorrow. It is only when the chips are really down that we as a people turn to the unpalatable alternative, usually wrapped in a light blue wrapper. As Pogo stated – we have met the enemy and he is us.

Screen shot 2013-11-29 at 19.52.49We learn nothing. We now see the undeniable starting point of a new, perhaps localized, but undoubted bubble in the housing market. On admittedly low volume we see house prices rising by double digit figures. This is not greeted with horror as it should be. Instead it is seen and hailed as a success. Five years from the bursting of the bubble, the consequences of which took us from a national debt to GDP ratio of 25% to the present dizzying heights of near to 125%, which has resulted in the return of our favourite export Canned Paddy (now in new exciting flavors such as WellEducated Paddy to complement the old favorite Labourer Paddy), we have simply forgotten that rising house prices are not a good thing.

snowman1National Economic Bourbonism exists not just in house prices. There will be a delicious, and literally dark, irony if the day after we exit the bailout a national electricity strike takes hold. We can bluster about cloud computing, waffle about Silicon Docks and plamas about high tech exports till snowmen dance on the plains of Dis but if we cannot guarantee reliable electricity we are and deserve to be seen as not a fully modern society.

lagging

The exit of the Troika should be seen as an opportunity to become better than we have been. In 1921 the per capita national income of Ireland as a % of western European was 57%. In 1971 it stood at… 57%. Ireland had approximately the same per capita income in 1921 as Norway, Sweden and Austria and more than 50% more than finland. We have at least as much in terms of national resources as most of these. All are now considerably wealthier than us now and that is on GDP levels. Our GDP figures are puffed up by a MNC sector that is overly large and on which we are both overly dependent (its both totemic and a shibboleth) and yet unable to harness for tax or jobs. If we adjusted downwards the present day figures to GNP we would see the differences that much starker. We need to stop forgetting and take a long cold look at ourselves in the mirror. And we need to stop remembering and reminiscing and start wondering – what is it in the national culture that keeps us engaging in periodic bouts of economic self harm.

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7 thoughts on “Ireland – A nation of economic Bourbons?

  1. Seanán Kerr (@seanan_kerr)

    “…we have simply forgotten that rising house prices are not a good thing.”

    I order to forget something you must first know it, for example I can’t say I’ve forgotten my wife’s birthday because I’ve never been married.

    “We learn nothing.”

    Why is this? Can the blame be laid on the media who spin the story or a people who really don’t want to know and would rather complain about their personal difficulties than look at the bigger picture? Whatever you want to say the cause is surely the symptom is obvious, it’s like as if a person who’s spent the last five years battling a severe bowel infection were to greet a bloody stool with a rapturous cheer. It’s madness, utter madness, all it really shows is that both the people and the mentality that let this happen in the first place are very much un-shifted, I find this profoundly dispiriting.

    “We can bluster about cloud computing, waffle about Silicon Docks and plamas about high tech exports till snowmen dance on the plains of Dis but if we cannot guarantee reliable electricity we are and deserve to be seen as not a fully modern society.”

    As someone who’s been through that mill (well more like persistently knocked on it’s door for three years) I can definitely attest to this, when the NDRC comes along and gives a presentation they’ll tell your group of budding tech entrepreneurs “all you need is an idea”, which is utter rubbish, the rigorous selection criteria for these programmes means that the people who need the support the least are the ones most guaranteed to get it. Which for a body that is looking to make back it’s investment is fair enough, but the great tech egalitarianism movement is a myth. It will not save anyone who needs saving, it’s not even saving San Francisco (quite the opposite in fact, see here for an example of the issue of google-frication in San Fran explained in song by a drag queen http://popbitch.com/home/2013/07/25/google-google-apps-apps/ ) all it is achieving is making a small club of of quite well-off people with very good PR, very rich.

    Two recent-ish articles which highlight this are http://www.wired.com/opinion/2013/11/silicon-valley-isnt-a-meritocracy-and-the-cult-of-the-entrepreneur-holds-people-back/ and http://www.salon.com/2013/05/12/jaron_lanier_the_internet_destroyed_the_middle_class/ it’d be interesting to hear your thoughts on the latter, especially on his point comparing Kodak and Instagram as it could be said this is apples and oranges stuff, those Kodak jobs went to Pentax and Canon, not instagram, though I think his broader point is that these new tech businesses aren’t the jobs factories politicians would have you believe, in fact they’re often quite the opposite.

    Reply
  2. bendy

    You correctly explain why GNP is the more correct measure of National Income yet you’re article is littered with GDP references. If economists and commentators forced the politicians to talk in terms of GNP and did so themselves then we might all focus on developing and maintaining Irish owned businesses and thus develops our own national wealth. Like Sweden, Norway et al. Nothing wrong with MNCs but local owned is better and generates Irish wealth.

    Reply
  3. Pingback: The Troika couldn’t reform us…why do we think we can? | Brian M. Lucey

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