We need these expert scaremongers
The best is yet to come as the Irish economy moves tentatively but prosperously into the future -- if we can abandon our age-old bad habits, says Marc Coleman
TWO weeks ago, leading economist Austin Hughes said it. Last Monday, the Taoiseach said it and last Tuesday, Brendan Keenan said it: careless talk costs jobs, and David McWilliams and Richard Curran are careless talkers. The queues that formed outside Northern Rock's office this week have -- as Brendan Keenan pointed out -- nothing to do with fundamentals. Northern Rock rode out the recent money market storm. But when its depositors -- worried by a spate of apocalyptic media comment -- turned into headless chickens, it faced something no firm or economy, however strong, can combat: a loss of confidence.
Now, world financial markets are reeling and the housing market is shaken, both here and in the US. Last Monday's Generation Game programme is something the economy needed like a hole in the head. Likewise, the Future Shock programme of a few months ago. Exactly how many people are going to lose their jobs and how much housing equity will be lost as a result of those programmes isn't yet clear. But it will be more, much more, than the fundamental economic situation justifies. Like the Northern Rock situation, the damage will far exceed what was needed.
But let's get one thing clear: David McWilliams can't be blamed. In plugging his book and making his simplifications and generalisations, he is -- like Richard Curran before him -- only giving RTE what it wants. The question is why does RTE want to run down our economy? It is precisely in order to protect it from the pressures of commercialism and sensationalism that RTE receives a licence fee. It also has the privilege -- unique amongst national broadcasters -- of being allowed to generate advertising revenues. With these privileges comes a responsibility to produce factual, level-headed and accurate analysis. Its latest spate of economic horror movies are exactly the opposite, and their timing couldn't be worse for the economy and the jobs that depend on them.
Far from an economic storm -- or a property shock -- Ireland's economy is set to rock and roll into the century. Ireland is not, as David suggests in his latest book The Generation Game, like Uruguay. Our Latino-like passion for property aside, Ireland and Uruguay couldn't be more different. Uruguay is isolated in a corrupt and politically chaotic continent. Where ours is imperfect, its public institutions are dysfunctional and its educational system far behind ours.
Its high-tech multinational sector is not a patch on ours. With Euro membership in one hand, serious US multinational firepower on the other and growing relations with India and China in between, Ireland enters the 21st Century in a position of awesome power. If I believe the Celtic Tiger isn't over, it's because I believe it never really happened in the first place. Far from undergoing a 15-year economic boom, Ireland is undergoing a far deeper, more profound, process. A process that -- if we manage it right -- promises a future more flourishing than ever before; a future that will turn economic prosperity from a statistical fact to a reality.
Alone amongst the countries of the world, Ireland's population is 50 per cent lower now than in 1841 when 8.1 million lived on the island and 6.5 million lived in what is now the Republic. Although 1.5 million people died in the famine Ireland's population should have rebounded as did those of famine-stricken countries at the time like Finland. But for 100 years, Ireland was gripped in over a century of policy permafrost. British government malevolence in the 19th Century, followed by 20th Century Irish Government incompetence gave Ireland the worst economic governance outside of Stalin's Russia. As Europe's population trebled between 1850 and 2000, ours was cut in half.
Then in 1957 TK Whitaker and Sean Lemass finally broke the spell. Protectionism was abandoned and Ireland's economic clock started to tick.
Finally -- 110 years after it actually happened -- we started to recover from the famine. But although we'd opened our economy, we started to go backwards in the Seventies as state spending and taxation rose. Like a bubble in a carpet, policy incompetence had been flattened in one area, external trade, only to pop up in the management of the state's finances.
In 1987, good fiscal management was added to economic openness. We have never looked back and we have never had it so good. And there is a reason why this should continue well into the 21st Century. Outside of the far north of Europe, ours is the lowest population density country in Europe.
With globalization, hundreds of millions of people are on the move, looking for a country like Ireland to make their home. Land rich but people poor, Ireland is hurtling through history on a journey back to the future. Last year, the population of the state reached 4.2 million people, a number last recorded in 1861. There is a good chance that by 2041 -- exactly 200 years after the first Irish census, which recorded our peak level of population -- we will restore what our history took away. Far from collapsing, our economy and property prices will do more than hold up.
Provided we get our policy mix right, that is.
Yes, we are going back to the future. But what kind of future is it? How can Ireland grow its population when the 4.2 million here are suffering outlandish property prices and growing congestion? Sadly, underpopulation is not the only legacy of the famine. An obsession with land by our people and a dysfunctional approach to its management by our Government is blocking our progress. We are building a diverse and high technology economy in the 21st Century. But we are designing cities that look more like collections of small villages. We are building out and down when we should be building in and up. Rip-off house prices, long commutes and a declining quality of life are just some of the consequences of this. There are many others.
The water crisis in Galway is another. Poisoned by tens of thousands of one-off housing, it is yet another legacy of a stunted past. Farms, sub-divided in the 1840s in a desperate attempt to survive hunger, are now the foundations on which we build population growth. Instead of clustering efficient close knit communities, we are sprinkling our people all over the countryside. We are building a country in which public services -- everything from public transport, sewerage, water supply, healthcare and education -- are impossible to deliver efficiently. And despite a level of car ownership that is low by EU standards, the resultant long commutes have turned us into one of Europe's most oil dependent nations. With the price of oil exceeding $81 a barrel for the first time last week, this is not a place we want to be.
In its current form, the spatial strategy should be torn up and redesigned, this time properly. The Leinsterisation of Ireland -- from one third in 1841, Leinster now houses over one half of our population -- is not just bad for the economy. It is leading to the surreptitious anglicisation of the nation, the destruction of our uniquely Irish way of life. Our eastern cities contain vibrant multinational communities. But the most precious part of our cultural heartland, the Gaeltacht, is dying because of a failure to protect it, but also a failure to organise Irish-speaking communities into proper, economically viable, towns and villages.
Yes our future is golden. But the ghost of Bull McCabe still haunts the nation and holds the economy back. As Dublin Corporation tightens regulations on apartment-building to accommodate family living, we are finally making a start. Putting young people in our city centres, instead of casting them out to the country, is the way we have to go. Instead of spreading our population all over the country like butter, we have to cluster it efficiently. That way we will be building clustered communities, where the cost of providing public services is lower and economies of scale kick in. A root and branch approach to land reform; how we price it, how we plan it and how we build on it is the only way forward. To release the full potential of the economy, we have to capture the critical mass that comes from higher population density.
We have to reap the density dividend.
To do that, we have to confront the full legacy of the past, not just land.
Our electoral system has made successive governments the slaves of sectional interests. It must be reformed. Our mish-mash of a 100 governments -- national, regional and local authorities -- needs be be consolidated and directed by a strong, decisive and centralised government. Over 1,000 years after it was done first by Brian Boru, Ireland must have the benefits of a truly independent, truly strong and truly decisive government. One capable of governing for the long term and in the national -- rather than the tribal -- interest.
If we can do that, anything is possible. Most exciting of all, we can bind the North and South together into a form of unity that threatens no one and, unseen since the 1840s, a flourishing, united all-island economy.
That, for what it's worth, is my vision of Ireland's future. The obstacles to reaching it can -- with optimism and confidence -- be overcome.
We have a difficult couple of years ahead of us. But unless we talk ourselves into one, an economic storm is not going to happen.
If we keep our eyes fixed forward and our heads cool, then the best is yet to come.
Marc Coleman is Economics Editor of Newstalk 106. His new book 'The Best is Yet To Come' will be published by Blackhall Publishing. An overview of the book can be seen at http://www.blackhallpublishing.com/lifeissues/bestisyettocome.shtml