We score poorly on vice index
IF Ireland has become so competitive, how come a lap dance costs twice as much here as it does in other countries?
Perhaps a vice index might be a useful tool to track business costs, consumer sentiment and discretionary spending -- and it would show how we compare with our rivals for investment.
Last week's Eurostat figures showed that Ireland had the lowest rate of inflation in the eurozone. Prices rose by one per cent in the year to July compared with a euro area average of 2.5 per cent. Poor old Estonia had a 5.3 per cent hike. These figures have provided further evidence that Ireland is tackling some of the barmy costs of doing business here and becoming less expensive. About half of the increases in costs since 1999 have now been eroded in the downturn, leading to wild celebrations about how Ireland is recovering fast and that everything will be just tremendous.
The recent Forfas Cost of Doing Business report found that our international competitiveness is back at February 2003 levels. But back then thinktanks WEF and IMD were warning that Ireland's competitiveness had absolutely tumbled. The red lights were flashing back in 2000. We've a long way to go. Just ask the bean counters at Bank of America who want to exit the MBNA operation in Carrick-on-Shannon.
But while office rents and some corporate services are cheaper, Forfas has noted that other property costs such as legal services and landline charges remain nonsensically high. But business costs also include what happens after dark. And this is where we look very expensive.
A lap dance at Spearmint Rhino in Birmingham costs €23 (including entry fee), with another one at Spearmint Rhino's Australian club costing €39.99. In New York, Gallagher's 2000 strip club costs about €20.88 for the service. Angels lap dancing club in Dublin has a cover charge of €20 -- and a dance costs €25.
At €45, that's about double the price of a lap dance in Birmingham and New York and about 11 per cent dearer than Australia. This isn't good for the economy.
And Ireland is way out of whack when it comes to paying for sex.
University of Chicago economics professor Steven Levitt looked at the ins and outs of prostitution in his best-selling book Superfreakonomics in 2009. He found a degree of "price insensitivity" when it came to inflation but noted "demand for sex seems relatively uncoupled from the broader economy". The oldest profession is one intrinsically linked with the corporate community and so becomes a cost of doing business in a country and a measure of competitiveness.
An hour-long knee trembler in the posher side of Dublin with someone who doesn't look like a female version of Dan Boyle costs about €250, according to service provider websites. A bonk in Amsterdam will cost about €150 for an hour -- 60 per cent of the Dublin rate. Legal brothels in Nevada average around €174 for an hour, slightly more expensive than central London. An hour in Frankfurt will cost €160.
Equally the cost of illegal narcotics should be factored in to the competitiveness of any country. It may not be endemic but it's there. The latest UN Office for Drugs report shows that New Zealand is the most expensive place in the world to buy a gram of cocaine at $311.70, while cocaine costs around $97 per gram here.
Switzerland is less expensive at $82 per gram. The UK is also considerably cheaper than Ireland at $62 per gram. On the other hand, Bolivia charges $3.50 per gram.
But outside of cocaine- snorting prostitute-bonking expenses, other more prosaic business costs are still out of kilter. Especially for the slickers who decide whether or not to allocate capital here. An executive suite with a king-size bed in the Four Seasons in Ballsbridge is available for €435 for a mid-week night in September.
A similar executive suite with an equally king-size bed will costs €215 for the same September night in the Four Seasons in Jakarta, Indonesia; while Singapore's five-star Marina Mandarin will do it for €309. Or what about executive gadgets? An Irish Blackberry with 300 minutes of calls, 300 texts and one gb of data will set you back €60 per month on an 18-month contact. A two-year contract in the UK with way more calls and way more texts (but half as much data) costs €41.35 per month. A Sony eReader pocket edition costs €149 in Sydney Airport or €209 here.
It's not much better for Apple stuff, with an iPad 2 selling for €479 in Dublin and €347 in Hong Kong.
Ireland's seriously top restaurants do score well. The "tasting menu" at Restaurant Patrick Guilbaud costs €85. Compare this with the €175 cost at South America's finest restaurant D.O.M in Sao Paulo, Brazil -- or €146 for the tasting menu at award winning Noma in Denmark, or even the €191 special menu at Les Creations des Nasawira -- Japan's number one eatery.
A bottle of Dom Perignon 2000 will set you back €235 at Derry Clarke's L'Ecrivain -- but you'll pay €293 for it at Nobu in London. But outside the small group of A-list restaurants, things go horribly wrong. Dinner for two in Dublin's 'golden acre' between Georges Street and Grafton Street will cost about €130 and that's with house wine. A similar meal in Lisbon would come in closer to €80.
With Paris and Berlin lining up our 12.5 per cent corporate rate in their sights, it's clear that Ireland is going to need a Plan B to make it attractive to foreign investment. Being a cheaper and better place to do business is the only way to go. But business isn't just about the nine-to-five costs.
Sunday Indo Business