Burma was urged to move its capital inland from Rangoon. By China. Brasilia became the capital of Brazil after US underwater event in Alaska. Denver is a mile high and is receiving hush hush skeleton organizations and info from DC and other coastal and vulnerable centres.

Clathrates may multiply explosive effect in ways that are difficult to calculate. They gather wherever there is a river or regular flooding. Having infrastructure, even if of the nebulous economic kind, necessitates security “from the ground up”.

Good luck everyone, living below 100 metres!

Our viewpoints probably have more in common than might be immediately apparent here, I also am a big fan of the sink or swim philosophy when it comes to enterprise, and I’ve proposed and successfully argued with Irish health professionals about privatising the Irish health sector. If you’ve ever had a sit down with some of the more extreme elements among them you’d appreciate what that means.

However I also recognise that national industrial policy is a very powerful tool in getting things started, possibly the most powerful tool an economy possesses, and it would be criminal to neglect that potential advantage. Ultimately these enterprises must stand on their own two feet, but a great many major industries got their start due to national level public initiatives.

Surely you can see that it has worked in many places, and can work here too if applied with caution and foresight? I mean we’re verging on arguing the colour of the sky at this stage (its blue).

I take it then that you have no response to the value added argument regarding Denmark. I had expected better, sadly.

I honestly have no idea where you are getting no value added from in the case of Denmark - five and a half billion annually sounds like quite a lot of value added to me. Are Danish taxpayers putting that money into their wind industry?

The 30,000 jobs are all subsidised. Denmark benefits from a substantial transfer of income. No value is added, however.

I attempted to link to evidential documents but this website apparently does not allow that, however all of the information supplied is readily verifiable at any time, so it could hardly be called anecdotal.

Also I wonder would the industrial powerhouses of China, Korea and Japan have anything to say about those decades of research and all the many people who wasted their time doing it? I mean what, the greatest enablers of the global economy, computers and the internet, are a direct result of government direction and intervention. See for example who Intel’s primary customers were from the start, never mind the basic research that wasn’t going to get done by private industry.

The excuses are wearing thin at this stage, I’m afraid.

I would be greatly disappointed to find that a well reputed scholar such as yourself would be prepared to discount valuable options for formulating economic policy on a dogmatic basis.

As for the Danish, some might call it luck, some might call it foresight and well thought out strategies. As the saying goes, the more thinking they do the luckier they get. Speaking of foresight I would not be prepared to write off the multi billion euro Danish wind industry just yet, especially with those aggregated export figures.

Besides which why would a government create subsidies or otherwise invest in a technology if it was not in the best interests of that government and hence that country? Its not because they were feeling charitable towards Denmark, thats for sure.

First, the Danes made money in wind power not because they came up with a market-beating technology, but because governments gave hefty subsidies. That’s good for the Danes, of course, but it is a difficult strategy to follow — because it was luck.

Second, the Danes are rapidly losing their first mover advantage. There’s another lesson. It does not matter that you’re first. You should be there when the market gets big.

At the end of the day if you deny that direct governmental intervention and direction has proven extremely beneficial in certain cases, perhaps even a lot of cases, you aren’t operating with the full set of tools you need to make an informed decision. I’m no big-government type either but I recognise a successful strategy when I see it.

Hell, look at the Chinese economic growth, they went much further with government direction than even the Japanese MITI, and they seem to be doing fine out of it.

Coal subsidies are not the point. Wind subsidies are. Danish wind made money because Jurgen Trittin wrote them a big cheque.

@Brian J Goggin
Fair enough, but I have to say I’d find any alternative position fairly laughable.

@Richard Tol
I’m not sure where you are getting your information from, but the Danish wind industry is doing just fine and has been for a long time. With an aggregated export of DKK41.7 billion (> €5.6bn) in 2009 the Danish wind industry maintained the high export figures from record breaking 2008 despite the financial crisis.

Whatever German subsidies are in place are almost guaranteed to be dwarfed by German subsidies on their coal industry, so swings and roundabouts really. Government intervention in national industrial direction has a mixed track record I’ll grant you, it can work out poorly, it can work out really well. This is definetely not a one-sided argument however. By taking the key elements from the success stories and overlaying it on an Irish template we should certainly be able to figure out some sort of decent roadmap to leverage the resources of the state for the benefit of the people of Ireland.

I am not a free market uber alles type in case anyone missed it, our shambles of a government notwithstanding. Just because this government is bad, doesn’t mean all governments are bad.

That is all I have to say on the topic in this place.

bjg

There is no rationale for industrial policy. The government should reward success in fundamental and pre-competitive research; and enforce intellectual property right for applied research. Anything else is likely to fall victim to favouritism, particularly in a country with weak democratic controls.

What “nation” existed before the “occupation”?

bjg

Your argument against the reality that this process has been applied successfully in many diverse cultures falls flat by dint of the fact that these cultures are in fact extremely diverse, and frankly smacks of a “they are naturally better than us” sentiment. Entire corporate empires have been founded on the principle that what one man can do, another can do, an example of which can be found in the race to the bottom as far as outsourcing goes.

As for bright and motivated, far from being trite, during the boom years long term unemployment hovered around the 1% mark, and that’s with near on a half million eastern european economic migrants joining the workforce, so yes, I feel very justified in making that claim. Irish poets, musicians, and more technically minded people have made a serious impact globally, otherwise that diaspora you refer to wouldn’t be up to much.

There is no reason why we could not achieve the same effect as these other countries by shifting the focus from some ephemeral knowledge economy to something more tangible. Thats not to downplay the value of the IT sector, this should definetely be encouraged, but we need to do a lot more if we are to recover from the self inflicted wounds of the property bubble.

Just because previous governments made a haymes of it doesn’t mean that all future endeavours in this direction must neccessarily fail. Its very easy to wave the hand and say “ara shure”, but that doesn’t create jobs or deal with problems we all face today.

The evidential argument is clear enough - look around you at the industrial landscape in Ireland where a grant-aid culture has prevailed for over 20 years and the SSTI has operated through SFI and other agencies for more than 10 years. There is less indigenous innovation-active business in Ireland today than for many years. This is not a recent phenomenon.

The international examples you quote are more complicated than they at first appear and cannot be compared directly with an Anglo-American state such as Ireland. All of them are cohesive cultures which prize stability and sustainability. Some of them place a high value on technical virtuosity, craftsmanship and quality in ways that Anglo-Americans do not. None of them have a quick bucks mindset. In the case of Japan the early benefits of post WW2 government-influenced re-industrialisation for export may not prove to be sustainable - Japan is not an innovation leader in the way it once was. In the case of Germany its real strength is not and perhaps never was innovation-led heavy industry. It is the continued thriving of its committed ‘mittelstand’ light engineering sector which feed innovative solutions both to larger enterprises (automotive and aerospace) and to the export market. The survival and strategic oversight of these firms is based almost entirely on their own efforts - not on the wisdom or grant support of government agencies.

“We have some of the brightest and most motivated people on earth here in Ireland..” I think to be honest this is trite. How many states around the world could not make this claim? It would also question the correlation between being bright and either personal or business success.

I agree with you about the wisdom of tapping into the Irish diaspora. That is one of fairly few areas where the state can indirectly foster innovation and enterprise - for example by granting citizenship to second generation Irish outside the State on request and by making a concerted effort to woo the high nett worth retired of Irish extraction to spend part of their year living in Ireland.

As for the analytical arguments - Kingston makes those far more succinctly and persuasively than I can. I refer you to his essays on the development of Irish governance, economic policy and legal frameworks: http://people.tcd.ie/wkngston

There have been many countries which have taken this route with tremendous success, Denmark with wind turbines, German heavy industry, South Korea with shipbuilding and more recently software innovation, MITI in Japan, the list goes on. Top down influence on the direction of innovation can be very beneficial. None of these countries had their version of SFI mind you, with billions going in and nothing coming out, although I think Russia tried something similar.

We have some of the brightest and most motivated people on earth here in Ireland, for such a tiny country our global footprint has been impressive, and we are favourably situated environmentally. The state represents the people, if it doesn’t it ultimately becomes a self correcting problem, and the resources of the state should be put towards providing a direction for innovation and industry.

Billy Kingston summarises what he calls ‘negative evolution’ quite effectively in his publications for example here: http://www.tara.tcd.ie/jspui/bitstream/2262/29206/1/Studies09March.pdf

His opinion appears to be that the national innovation system, like an engine running on its own oil, is out of control and the damage it is doing to the operation of entrepreneurship will only stop with the forcible intervention of the IMF.

The public sector with its duty to protect the public purse from risk, bureaucratic decision-making, and the ethical need to prevent its servants from being significantly touched by the success or failure of state-backed enterprises is effectively incapable of addressing an alleged ‘market failure’ directly. Reward only comes about through risk-taking, superior work rate and commitment and the construction of knowledge differentials. None of these aspects tend to be encouraged or found in public service.

The role of the public sector is to provide low taxes on enterprise, correct for market failure in R&D and innovation (tax breaks for R&D and innovation) and venture capital funds, provide protection for intellectual property and support for relevant infrastructure (without Department of Defence funding of internet, Silicon Valley would be a pale shadow of what we see today).

In effect in Ireland this means even larger subsidies to multinationals who already enjoy substantive benefits over and above what they can obtain elsewhere. The argument from ‘market failure’ can be used to justify just about any degree of state interference. The old Soviet system tried its hand at this repeatedly. The whole idea that one can plan innovation in a rational and prescriptive manner gives me the creeps. It smacks of technocratic elitism that denies development opportunities for those outside chosen (state) sectors. This may be very digestible policy in the ether dominated by bureaucratically tuned elites but they let in a Bill Dyson for example? Ireland will soon have more experts on innovation than actual marketable innovations but that’s par for the course unfortunately.

Yes, of course there is. The issue is who should do it?
Private entrepreneurs - risking what ever resources they can molibilise, without recourse to anybody and bearing the consequences of failure as a reciprocal of becoming wealthy should they succeed?

State bodies - with implied recourse to the citizens via the state and no individual bearing the consequences of failure, but equally not becoming independently wealthy?

As you point out, the issue is what kinds of entities are going to arise depends on how the markets are “structured”? It is well documented that Intel’s only customers in the early years was the US Dept of Defence.

See TCD’s William Kingston’s thoughts on innovation here
http://people.tcd.ie/wkngston

Is there not a case for securing licences to apply and developing the competence to apply innovations developed in other countries? Some of the most important innovations have built on an original path-breaking innovation and developed it and applied it new markets and contexts.

I also found Prof. Covery’s afterthought on markets and where it is located in his listing of prerequisites..
“To which we should add attention to the market and what consumers want and are willing to pay for, and the expertise to convince them of same.”…
very enlightening. In Ireland, the final consumer - who pays for everything - always comes last.