The Irish Rorschach test

For economic developers and public policy wonks, Ireland is a kind of a Rorschach test – everyone looks at it and sees something different. Some see the billions in EU transfer payments as the most important part of the Irish economic miracle. Some see trade liberalization. Some, interestingly many in Atl. Canada, see the corporate tax reductions as the most important element. Others see the direct financial incentives. Others see the focus on free post-secondary education. Some, including me, place importance on the amazing international marketing campaign that resulted in record amounts of FDI (including playing the ‘Irish’ card with expatriate Irish who were senior executives in hundreds of American firms). Others talked about the reform of government and some, ahem, talked about the critical deal struck with the national unions.

I am going to Fredericton this afternoon to hear Mary Robinson, past President of Ireland present her views on economic and social renewal in today’s globalization, drawing on her experience as President of Ireland. Following her speech, Frank McKenna will moderate questions.

I wonder what angle these two will play? If AIMS was moderating, there is no question it would be tax cuts and smaller government.

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0 Responses to The Irish Rorschach test

  1. mikel says:

    Here’s a thought-maybe its ALL those elements. Making sweeping claims like that its one thing or the other is like saying there is only one reason somebody believes in God.

    To add to that there is also the language issue, for somebody like Microsoft its also helpful to have headquarters in a place where your executives speak the same language.

    As mentioned before, its also ‘payback’ for going on the ‘right track’. Talk about Ireland all you want, I’d take Norway’s economy any day of the week. Likewise, in Switzerland it costs $20 for hash browns and eggs for breakfast-but there is no poverty (compared to Ireland-and Canada). The swiss economy has almost NEVER had a recession, yet in economic circles nobody talks about it. During the 30’s, the Swiss unemployment rate ‘dipped’ to 4%.

    The OECD found that Ireland has the highest rates of child poverty. Large corporations LIKE elitist countries because they know that they’ve accepted modern economic reality-subsidies for the rich and ‘markets’ for the poor. If you put all those together its no surprise that Ireland saw more FDI-however, it’s a prevalent economic bias that would call it a ‘miracle’ and not a tragedy.

    The irish literally went from being a puppet of the English-which they didn’t like-to being a puppet of multinational market forces-which lots of Irish don’t like but doesn’t get much exposure when economists talk about the ‘irish miracle’.

    One thing that can’t be forgotten (but usually is) is that, as a tax haven, by far the largest ‘investors’ into Ireland has been the United States. Everybody ‘should’ know that the IRA was primarily funded out of Boston, there are LOTS of wealthy irish in America, and that many of them are executives on these corporations can’t be overlooked. If you were from a colonized country and it opened up its market you’d invest there too.

    But actually I haven’t seen the numbers but the ‘celtic tiger’ stuff really peaked a few years ago now and I’ve really never seen stats that show its STILL a ‘miracle’ (although it IS still a tragedy for those kids).

    A more specific analysis is always required, but usually never done. For example, two years ago they dropped the ‘royalty free’ tax scheme on books and music. Some high profile musicians and novelists left, but there’s been little talk about what the economic fallout really is. Is it possible to reverse ‘tax free’ status and still hold an industry together? Was it the royalty scheme at all or other cultural effects?

  2. mikel says:

    Sorry, on the swiss example it was supposed to be that unemployment ROSE to 4% during our ‘great depression’.

  3. Anonymous says:

    Quick David!
    Could you do what you could to have Ontario pay next years transfer payments ,NOW.
    And cash please.

  4. mikel says:

    Darn, half the time the comments never seem to make it to you. My point much quicker is that you can look at other countries like Switzerland and Norway and find FAR better examples of economic ‘miracles’.

    In Ireland, I mentioned before the OECD study that found that Ireland has the largest per capita number of people in poverty-primarily children. So while it can be called a miracle from one perspective, it can also be called a tragedy.

    I suspect each company would list ALL the reasons you give as a reason to set up there. Keep in mind that there are lots of Irish in America and most of its investment since the british have moved out has been from the US. Boston was pretty much the main supplier of funds to the IRA, so its no surprise american irish invested heavily in Ireland once markets were opened up.