UCC’s Eoin O’Leary has just published his monograph “Irish Economic Development: High-Performing EU State or Serial Under-achiever?” From the publisher’s site:
This book offers a discerning narrative on the spectacular rise and fall of the so-called Celtic Tiger economy. It depicts Ireland as a micro-state with a unique reliance on foreign-assisted businesses, driven in part by a favourable taxation regime. It shows that rent-seeking by trades unions and property developers contributed to the fall since 2002. Although the country’s highly centralized government’s pre-disposition to lobbying has yielded international successes, it has also resulted in recurring self-inflicted crises since 1970.
This volume shows how Ireland’s export-led growth is associated more with the attraction of foreign-assisted businesses than with the development of critical masses of internationally competitive indigenous businesses. Although the success of foreign-assisted businesses in the pharmaceutical, ICT and finance sectors has been influenced by tax advantages, many of these businesses have been involved in highly productive activity in Ireland over a number of decades. The problem of rent-seeking is shown to have undermined Irish competitiveness in the internationally traded and sheltered sectors. The Irish policy mind-set is shown to lean towards distribution rather than growth. While this has been advantageous for how ‘Ireland Inc.’ interacts with other governments and international businesses, it has also resulted in a failure to resist the destructive effects of capture by lobbies.
In conclusion, this book considers future opportunities offered by the EU’s smart-specialization policy and future threats from increased international tax competition. It argues that unless Irish citizens and policymakers change deep-seated attitudes and mind-sets towards business development, the country’s performance for the next number of decades will more likely resemble serial under-achievement than that of a high-performing EU state.
Details are here: http://www.tandf.net/books/details/9780415645126/
28 replies on “New Book on Irish Economic Development”
Re: Local government
What could make a considerable difference in my humble opinion, is that if instead of trying to recruit ‘experts’ to positions of national scale government, or parliament in Ireland, . . . that a certain quota, of places instead in chambers of local government, . . . throughout the country, could go to suitably qualified ‘experts’ in various areas, to do with business, development, the environment, social sciences or whatever it is.
I think that the addition of some ‘expertise’, down at that level of administration in Ireland, which is needed to make assessment of development of specific regions, would be crucial.
I.e. This inclusion of the non-elected expert, at local government in Ireland, would also avoid the fact that different parts of Ireland, are different from each other. Dublin local government challenges, are likely to be different to those faced somewhere else.
Whereas, if you elect, or appoint ‘experts’ into national level government in Ireland, those ‘experts’ are very constrained in what they can do, by having to approach things in a very general fashion, and suggest policies that would apply equally well, between Donegal and Wexford, between Kerry and Louth, . . . and everything in between.
Inclusion of experts in government at more local levels, would enable the expert to be better used.
It would also ‘short circuit’ that thing in Ireland, where the same few families and dynasties who are interested in continuing a ‘legacy’ for either one ‘party’ or another, . . . devote the major portion of their lives to sitting in places like local government chambers, . . . which becomes the kind of ‘reserves bench’, of human resources to draw off of, . . . each five years, when the national scale team (the so-called Irish political party), has to retire off a few bodies, . . and pull new bodies ‘off the bench’, from the various local chambers.
They talk about the Senate house in Kildare street in Ireland, being a sort of reserves bench too, for un-elected national scale politicians.
But the local government’s purpose, is neither to serve local issues or challenges, but just to be some kind of waiting room too, for a select few who go on to become deputies.
And of course, having gone to those huge lengths, and sitting all those years in local chambers, all that really changes then, is a hundred and something bodies, instead off sitting in a local chamber, sit in one in Kildare street.
And not much else happens, other than that much.
This is also, why I would say, that inclusion of non-elected experts, at local government levels would make sense, . . . because it would mean that those spending their time in the ‘reserves benches’ all around Ireland, . . . would have some chance to rub shoulders with some people, who really were informed, . . . instead of all the young cubs, belonging to the different political jerseys in Ireland, sitting around and getting to know each other, far too well (and as a consequence too, making themselves total targets for the same ‘capture’, which this book supposed to talk about).
I’m a hundred percent convinced, that detailed databases exist of every single councillor in Ireland, from every party, . . . which are maintained by Ireland’s PR companies, . . . so that even before, the young cubs are drafted ‘off the bench’, and put into a national team jersey, . . the PR companies, already have them more or less captured, and entirely figured out.
There’s only one way to break that same old cycle, and ‘disrupt’, the lobbyists and PR companies, . . . and that’s to introduce non-elected expert members into chambers at a local government level in Ireland, who could offer some un-biased assessment and analysis of challenges, facing places in Ireland at specific local area scales.
That in turn, would then feed into the national system, via the normal election politic processes, that we already have. But the problem with the current system, is that by the time the politicians get to Leinster house, they are already more or less captured. They don’t have the ‘development’ needed, at local levels to enable them to have self-thought, and abilities to process the information. They are sitting ducks for PR’s and lobbyists, already by that stage. Sitting ducks. BOH.
“rent seeking by trade unions”: yeah, that was the problem. Much better to leave the rent seeking to the professional rent seekers in the 1%. I mean: how dare labour insist on any part of the pie? Inequality forever!
Imagine: neoliberal ideological claptrap from an Irish economist!
How much of the $150 price is rent?
“rent seeking by the trade unions” o.k we should abolish all unions and get rid of the minimum wage. In that case we could compete with China and everybody could work for 1$ an hour and work 80 hours a week. Of course we have a little problem with national debt and negative equity – solution stop social welfare and shut down the hospitals – enough of this neo-liberal claptrap masking itself as serious economics. This is not economics it just the return of a feudal society where we can see in the latest Irish Independent wealth index that the “wealth” of lottery millionaires is advancing faster than 100 times the average take home wage exactly as Pickerty predicted. These wonderful entrepreneurs and supermarket owners would only be delighted to get rid of trade unions and throw us all into poverty.
“it has also resulted in a failure to resist the destructive effects of capture by lobbies”
Never happens anywhere else of course.
Europe isn’t built the same way as the US either, unfortunately
“For the real economy, the impact from QE seems to us quite limited and less effective than in the US, due to a stronger reliability of lending in the European banking system and far fewer wealth effects,”
Over to the Krugmeister for what those wealth effects mean in macro terms
“Corporate profits have soared as a share of national income, but there is no sign of a rise in the rate of return on investment. How is that possible? Well, it’s what you would expect if rising profits reflect monopoly power rather than returns to capital. ”
Young gung ho economists who are in awe of the US were born about 20 years too late. Ochon.
It’s a pity that so many contributors seem unable to comment in rational terms without throwing dog’s abuse at those who hold contrary views.
There is a more informative description on the UCC site and it could interest an international audience as the issues covered have been well-raked over for the locals since the bubble while Eoin himself does not appear optimistic that the Is féidir linn (Yes we can) Gaelic version of the Obama slogan will have any more long-term success in Dublin than it has in Washington DC.
A recovery should be a time when vulnerabilities and challenges are acknowledged but as Harry McGee reports in the Irish Times today on the Kenny/Burton show on their latest progress report yesterday: “Successes were trumpeted, failures airbrushed out and the back patted.”
The fact that Burton who succeeded in two male dominated professions—accountancy and politics—was happy to play Judy to Kenny’s Punch, is disappointing.
Ireland does need more new firms, more exporters, more patents, higher pay and so on.
The most successful lobby group must be the IFA and it is interesting to compare the past official accommodation of a huge tractorcade in the capital compared with the reaction to water charge protestors.
CAP payments account for over 70% of typical farm income but for a food producer agricultural land prices are among the highest in the world and 4 times the level in France because of very low transactions.
Last week Charlie Flanagan launched the latest in a fiction series from the American Chamber of Commerce in Ireland showing Ireland as the top recipient of US FDI. The new US ambassador found the data on Irish investment in the US to be “incredible” and so it was.
rent-seeking is bad from any quarter.
Why can’t Ernie and some others accept that? They do themselves a disservice.
I reject the idea that workers–who are the producers of value–are properly referred to as “rent seekers.” Fighting so that capital expropriates less of the value created by workers–which is the function of trade unions–is the opposite of rent seeking. It is the fight against rent seeking.
But I’ll bet those making this lame case against trade unions think that foreign hedge funds in the IFSC are dynamic wealth generators and not parasites.
So in your fantasy Marxist land, all civil servants and university lecturers produce ‘value’ which is somehow ‘expropriated’ by others (laughing capitalists in top hats)? In fact, even Marx spoke of the ‘socially necessary’ amount of labour embedded in the value of a good; ie, even he recognised that taking longer to produce something didn’t increase its inherent value.
Other than the overwhelming numbers of unaccountable bureaucrats (put in place largely to assuage the public’s desire for something called “accountability”), why, yes, I’d say that lecturers and doctors and nurses and firefighters create and preserve more “value” for the society than the entire IFSC.
Is this supposed to be controversial? You be sure to tell that to the firefighters or guards next time you need their services.
It’s a given that many (most) public servants perform valuable work. But setting the price for that work is not always easy, especially when there are few incentives to perform to a higher level or to rationalise service delivery, and even fewer sanctions for underperformance.
I’m with you Ernie. In fact one could argue some of financial services industry has a net negative effect on society. I have a friend working in one such IFSC company, he’s on the technology end of High Frequency trading. The in joke is that they’re essentially functioning as a kind of tax on DC pensions masquerading as ‘liquidity providers’. So from a social contribution perspective one could make the case that these guys should be on negative wages.
Now I recently had the good fortune of becoming a father, a baby girl. We can’t afford private health insurance. So it was fully public on the mid-wife scheme. The competence and care my girlfriend received was 2nd to none. What ever our midwife is getting paid it’s not enough. She was brilliant. Incidentally, the post natal ward on the other hand was an absolute zoo. 6 women and babies in a room the size of the average living room. Some of whom had had serious procedures and were in for many days, that’d be many days of noise and annoyance without sleep. Not ideal for a recovery. I observed 4 semi private rooms on the same ward. 2 had no women in them. 2 had one women in each. Rooms bigger than the public room. Absurd.
I would suggest that the core problem is a failure of management. Successful management can only be determined in terms of outcomes, whether in the public or the private sector. Our health service is failing because there is no agreement on who is managing it.
Everyone can relate personal experiences of this phenomenon. In my own, that of having a car, the only means of transporting a wheelchair bound relative recovering from orthopedic surgery (because ambulances were not available for the return home (!)) clamped outside the orthopedic unit; because it did not have a disabled vehicle sticker! And meeting a member of the medical staff who expressed sympathy with me but who said he could do nothing about it as the control of parking had been outsourced to a private company! And the hands of the employee in question were tied! Leaving me with the privilege of paying €100 for the privilege of driving the relative in question, in some considerable pain, home!
The only way to fix this problem is to have the client – the new word for patient when customer would be better – deciding the issue as would be the case in any commercial context. This is not easy when the customer may be at death’s door. In short, a market mechanism “where the money follows the patient”. An idea that is now history! And 10,000 hospital patients on trolleys, if the IMHO is to be believed, in the past month as a result!
Either we introduce a form of universal health care, following one or other of the more or less successful examples in Continental Europe, or we don’t. The debate otherwise is so much piffle!
Rent-seeking has nothing to do with whether an economic activity is paid from the public or private purse.
To take one good definition, it is;
1. The act or process of using one’s assets and resources to increase one’s share of existing wealth without creating new wealth.
2. (specifically) the act or process of exploiting the political process or manipulating the economic environment to increase one’s revenue or profits.
A glaring example from Greece which I have just posted on another thread.
Of course, one person’s rent-seeking is often presented as another’s entitlement to essential “front-line service”. Unfortunately, unless there is creation of new wealth, one person’s gain is another person’s loss.
I couldn’t agree more DOCM and I’m outraged listening to your story. If I had been on the seen. I would have gladly sourced a bolt cutters and done the job for free. Some of those operating in the private clamping business are doing so at the very edges of the law. It wouldn’t be in there interest seeing a case like yours going to court. I hope you’re appealing the decision.
What sort of sanctions are there for serious underperformance at the highest levels in the private sector? Say the CEO of a bank costs the taxpayer 35 bil. What sort of sanctions do the CEO, the auditors, the board, the accountants incur ?
Surely it’s more important than someone at entry level in the PS taking too long at a tea break or am I missing something ?
Great definition. By that definition, the entire financial services “industry” is nothing but rent seekers. Not to mention IBEC.
What’s missing is a recognition that what trade unions are involved in is getting BACK for their workers (from rent-seeking expropriators) more of the wealth that those workers create. And that is why the definition of rent-seeking you provided does not apply to them.
P.S. Nothing I said implied that I thought that rent seeking had anything to do with source of funding.
DOCM’s example is a textbook case of what happens when public services are outsourced to private-sector companies for whom profit is the only recognised value.
“It argues that unless Irish citizens and policymakers change deep-seated attitudes and mind-sets towards business development…”
The mind-set that Ireland must sell every available strategic asset in sight, is the predominant mind set at present.
Coillte intends to sell 400 towers, presumably located at 400 strategically high reception points, to the highest bidder. The result will mean that whatever little piece Ireland was getting from the mobile phone industry, will now be sold off to ‘international’ business.
Are the mobile phone towers, strategically located, not the equivalent of the landline telephone network?
Why does a state, borrowing at 1%, insist that semi-state commercial organizations sell off strategic assets yielding possibly 5%-8%, so that they can pay dividends to the same state.
This sale does not make sense from either a strategic or financial viewpoint. It is far more important to hold onto these sites than it is to hold onto Aer Lingus.
The narrative of the book is very relevant to how Ireland approaches the future, but we do appear stuck, even after the shock of the crisis, in mind-sets and ideologies that are not in the long term national interest.
How do you decide the level of ‘wealth’ created by a civil servant which he or she is entitled to ‘get back’?
The problem with the strong recovery scenario of JTO and the rest of the pack is that the expectation levels go up. And pensions get paid based on expectation levels.
Let me turn your question around. In contemporary capitalism, as a general rule, the more socially useless a job is, the more highly remunerated it is. So hedge fund analysts are multimillionaires and nurses are among the working poor. Those in jobs that nobody would miss if the entire category disappeared tomorrow are paid extremely well. Those in jobs that are utterly indispensable are generally paid badly.
What will not do in this circumstance is to import into the public sector the systems for evaluating remuneration of the private sector. This has already been done, with disastrous effect, in the HSE and in higher education where you have useless bureaucrats being rewarded (rewarding themselves, actually) handsomely, just like their private-sector counterparts.
What will especially not do is to vilify those doing indispensable work (as has been done throughout the Irish media including this blog for the last 10 years or so) as “parasites” while upholding the real parasites as unassailable paragons of (capitalist) “virtue.”
You have wasted valuable time because you do acknowledge that there are rent-seekes in the public sector, in your example of the “useless bureaucrats being rewarded (rewarding themselves, actually) handsomely…”.
Previously you had a blanket denial.
I gather nuance isn’t your thing.
I made and continue to make a distinction between workers who create value (in both the public and private sectors) and those who do not. And I would like the trade unions to start to make this distinction. I follow David Graeber in believing that the left cannot abandon the critique of bureaucracy to the right. But from there to endorsing blanket attacks on trade unionism or, worse, the ideological assumption put forward as “common sense” that trade unions are nothing but a form of rent seeking, well: no.
By the way, the only reason there are any significant numbers of rent-seekers in the public sector is because You Demanded It. The public, convinced as it was by the media that the PS was made up of timeservers, insisted on “accountability.” The HSE is what a bureaucracy devoted to accountability looks like. They have no purpose but to monitor everyone else (again: because you demanded it) while they themselves are unmonitored and more wasteful than any waste they might have discovered.
So: Are you happy?
Having acquired this monograph, my view is that it is a mightily impressive piece of work. It deserves wide circulation among interested citizens, students of economics, the economics profession, politicians and policy-makers. It should, as the author hopes, provoke “a vibrant debate among academics, policymakers and Irish citizens on its central arguments”. But, at US$150 a pop, I doubt it will receive anything like the circulation or desemmination required.
This high tariff which limits public access raises an interesting issue when, presumably, most, if not all, of the effort to produce the manuscript was rewarded from the public purse.
The author presents a compelling rationale for adding significantly to the existing relatively paltry amount of research in the areas of business development, rent seeking and policy analysis. But unless these is an informed public debate on the need for this research there is no possibility that the demand will emerge which will call forth the supply.
Did someone mention “rent-seeking”?