November 27, 2005

Thoughts and Questions about Ireland and Ireland’s Economy -- And the Anglosphere


This post says:

The Irish model combines the so-called “active welfare state” of continental Europe with the Anglo-Saxon liberal economy in a balanced fashion. The model is efficient. Ireland surpasses all other EU members in prosperity, job creation, social expenditure and productivity per working hour.

Our colleague Verity has said Ireland’s performance is due to EU subsidies. But others said, yeah, well, why isn’t Greece booming? How much do EU subsidies impact this seemingly rosy performance? Will the current Irish boom continue if Ireland were more oriented toward, say, a North Atlantic NAFTA? Aren’t they about to lose their EU subsidies anyway?

My question for anyone who has done business in Ireland and knows first-hand: How Anglospheric is Ireland? Is it a very well run European country? Or is it an idiosyncratic Anglosphere country in terms of business culture, legal culture, government efficiency, tax policy?

Getting Ireland interested in the Anglosphere is more important than the relatively small size of Ireland itself indicates. America’s Irish population will not be inclined to be supportive of something that seems to benefit Britain, or be some British-inspired initiative. But I think they will be supportive if it is seen to be good for Ireland, too – particularly if it will be seen to bring Ireland and America closer together. Generating political momentum for Anglospheric initiatives inside the USA will be hard enough as it is, so getting this politically active interest group – composed of Democrats, too – interested in some of its elements, like a sojourner treaty, could be very helpful.

Please pardon a post with no facts and a lot of questions. If you can’t think out loud on a blog, where can you do it?

Posted by Lexington Green at November 27, 2005 09:13 PM
Comments

Having done business in Ireland, my impression is that the legal system is essentially Anglospheric, as are the business culture (at least in high tech and finance) and basic governmental structure. The people at the Irish Development Authority were pretty adamant that Ireland would never, ever accept tax harmonization within the EU.

Ireland has probably had the most idiosyncratic development path of anywhere in the Anglosphere, and until recently the most tragic. The point of interest for the Irish will probably be the reality that the Hibernosphere exists within the Anglosphere, in places like Glasgow, Boston, Chicago, and Sydney.

Posted by: Jim Bennett at November 27, 2005 09:22 PM

"Getting Ireland interested in the Anglosphere is more important than the relatively small size of Ireland itself indicates"

I agree, but how keen are the Irish to reorientate towards the Anglosphere?

Posted by: mark at November 28, 2005 02:44 AM

No, I don't think Ireland is about to lose its subsidies. Quite soon, all the various subsidies will have to go as there is no money coming in. See arguments about EU budget, passim. Ireland is basically Anglospheric in many ways, not least its legal and political structure. It has a low corporate tax structure at the moment but it is rather addicted to its subsidies, I fear. The point of having large amounts of money pouring in from other EU member states is that no Irish government ever has to make those hard decisions that others might if they wanted to reduce taxes or even go for some form of flat tax.

Posted by: Helen at November 28, 2005 09:36 AM

Where is that EU subsidy money coming from? Someone, somewhere, is getting squeezed to give Ireland these subsidies.
Does anyone really know where the capital comes from?
Is it being coined as Euros and they issue extra digits as a bank?

Posted by: DocJim at November 28, 2005 10:21 AM

Where does the EU subsidies come from? Are you seriously asking? It comes from net contributors: Germany, UK, Netherlands, one or two others.

Posted by: Helen at November 28, 2005 12:18 PM

Ireland has become a net contributor to the EU budget in recent years, so let's stop the nonsense about subsidies. EU inflows certainly helped the Irish economy, and they were invested for the most part wisely.

The thing to remember about Ireland is that it is a very small country (4m people), hugely trade dependent and mostly lacking a home grown industrial base. This has allowed Ireland, and Irish governments, to quickly change course and create a very pro business environment. Our annual budget once included a line item for a train station next to an Intel plant.

Our legal system is based on the UK for obvious reasons.

Posted by: potato at November 28, 2005 05:57 PM

Ireland a net contributor? Figures, please, before the rest of us can believe this. And figures for everything, not just agriculture.

Posted by: Helen at November 29, 2005 06:21 AM

Ireland is still a net beneficary although that is generally consumed by agriculture. Has this anything to do with Irish growth: something I suspect, maybe an extra 1/2% to 1% per year to the growth rate. Nothing to explain the boom sonce 1992 ( which is partially explainable in it's latter stages by increases in credit). If subsidies increased GDP significantly Sub-Saharan Africa would be growing at 10-40% a year.

Verity wants to explain the boom in Ireland by explaining it on EU contributions merely because she is an anti-Irish horses ass.

Ireland did benefit from the EU, and does, and England benefits to a much larger extent from sitting on North Sea oil and gas. America benefits from having the worlds reserve currency.

We all benefit, for now, from cheap credit. Something, somewheres, gotta give, and the Anglosphere is - by and large - fucked.

Posted by: eoin at December 3, 2005 06:31 PM

Eoin, the substance of your comment is sufficiently interesting that I didn't delete it. This is your one warning to be civil around here. Tone down the invective and your thoughts will be welcome around here.

Posted by: Lex at December 4, 2005 08:04 PM

While in Las Vegas on a business trip recently, I had a very pleasant conversation with a cab driver from Ireland (who was in Vegas to start a catering company after he got tired of owning a pub in Boston). I could tell from his answers to my questions that he had a visceral, on-the-ground appreciation for the reality of the Anglosphere and Ireland's place in it -- all the young Irish folks going hither and thither (Boston, New York, Australia, etc.), the common bond of the English language, the large number of ties across these countries, his calling Ireland "the 51st State" because of all the American companies who've set up shop there, and so on. I think we need an "Anglosphere Challenge Lite" book to hand out to folks like that. This Irish cabbie would've gotten the idea in a hurry.

Posted by: Peter Saint-Andre at December 4, 2005 09:38 PM

Eoin had one good point -- EU subsidies are no longer a big contributor to Ireland's prospeity. Maybe they were in the 70s and early 80s before the takeoff really got going. There's no secret to the current boom-- low taxes, educated workforce, low taxes, English-speaking workforce, low taxes, Common Law, low taxes, access to European markets. The latter is also due to the EU but that's not the only way it can happen -- consider Switzerland. And, oh yeah, did I mention the low taxes? If the EU ever manages tax harmonization, it'll be Ireland that's f*cked, and boy, the IDA really, really understands this.

As for the rest, it's interesting that there's all these different economies that have very similar profiles and performances, but coincidentally, each one of them is prosperous for an entirely different reason. Now that's a coincidence! Only the UK hasn't had that much of a boost from North Sea oil in a long time. The US gets effective seniorage off its reserve-currency status that's worth less than one percent GDP. And what is Australia's secret? Vast kangaroo reserves, no doubt.

Actually, if Eoin were right, and English-speaking national prosperity were due to such fortunate accidents, it's not clear why a change in one country's status should affect the rest. So Britian runs out of oil. Why will that screw the USA? In actual fact, it would take all of these supposed factors collapsing simultaneously to do in the whole lot.

Posted by: Jim Bennett at December 4, 2005 11:46 PM

1. GROWTH AND EU-SUBSIDIES.

The graph shown at
http://workforall.net/English/size_of_government.gif
clearly illustrates that Ireland's continuous wealth explosion has a neat starting point in 1985, and that this starting point coincides with the moment they reduced their tax burden.

The relation between EU subsidies and Ireland's explosive Growth is statistically insignificant.
Ireland benefited from European subsidies long before 1985, with no growth effect noticable at all.
Ireland's growth explosion continued its steady 5,6% pace when European subsidies dramatically were reduced, and the Irish boom continues even today (5% growth expected once again). The spread diagram between subsidies and growth consequently shows no relationship at all. Other regions such as Greece or Wallonia received comparable subsidies, but apparently could not use them for the benefit of their economies at all.
.
2. SCIENTIFIC PROOF.
The conclusion that big government harms growth and that high direct taxes on income and labour are the most distortive taxes (as opposed to consumption taxes) does not originate from single country comparisons, but from the scientific multiple regression analysis in which 17 European countries were involved. In this investigation WorkForAll examined 25 possible causes of growth differentials over an 18 year period. The regression model explains for over 93% of the growth differentials and left only 7% unexplained for. The conclusions are undisputeable and clear: "big government" is detrimental to growth, and "countries with a higher proportion of consumption taxes" have very significant higher growth rates.
Full report of the study can be read at:
http://workforall.net/Tax_policy_and_Growth_differentials_in_Europe.pdf
And the abstract at :
http://workforall.net/EN_Tax_policy_for_growth_and_jobs.html
.
3. THE CENTRAL POINT
The central point is do we choose for Irish policies which have proven realistic and successfull for over 20 years, or do we believe socialist dogma's and choose a Scandinavian nanny type of government that proved so catastrophic for both wealth and job creation, and robbed the individual from his dignity as a free and responsable being?
As anonymous posted here before: if we adopt a more Irish view, it is possible to create bigger wealth. More people become independent of government support. The Scandinavian model however, only redistributes wealth without any progress in society. In the long run, there will be equality, but it will more resemble equal poverty than equal wealth.

Posted by: paul vreymans at December 11, 2005 02:27 PM

thank

Posted by: iman cosmetic at September 28, 2006 11:09 AM

At the risk of sounding rude, Ireland can do very well for itself on its own, thank you very much.

I don't mean to say that we cannot do without our international partners and friends, goodness no.
What I am saying is that I don't like the idea of some scheme being hatched in Washington or London to force us into some economic combine that will potentially only benefit the main members of this 'Anglosphere' ie US and UK.

We have, under our own steam, struck out on several trade missions. Our Taoiseach(head of govt), Enterprise, Education and Agriculture
ministers were out with 120 Irish companies signing deals left, right and centre in the Middle-East a few weeks ago.

In 2005 we went on an extensive trade mission in China represented by the same governmental team and that sparked off a huge rise in trade between ourselves and the Chinese.

The South African govt were also over in our country in a few-day tour keen on boosting trading ties. This partnership can be seen in an Irish-owned media company (Independent News&Media) publishing South Africa's biggest selling Zulu newspaper.

As well as that we have established open skies with our fellow ally in globalisation-Singapore late last year while the EU and US struggled to come to agreement.

Equally, we are now actively engaging with middle Eastern airlines to establish Dublin as a new air hub to connect flights from the Gulf to NY, Baltimore, Boston etc.

As well as that, we have now engaged with the Japanese bank Daiwa to establish a major financial office in Dundalk, a large town in North-West Ireland.

As you all can see, many of these companies, countries and such-like are firmly outside the 'Anglosphere' and that's how it should be. limiting ourselves to countires that only speak the same language is very parochial, narrow thinking like that is why our country remained firmly at the back of the world economic classroom.

And I'll leave you with the salutary statistic that, before EEC entry we were very much a province of a UK 'Anglosphere' with 90% of our trade with the UK. We were totally at the mercy of decisions in Whitehall, Threadneedle St and Westminster. Not any more. We have fought for our independence precisely so that we would never again be slaves to a British realm on British terms.

Posted by: Cathal Dunne at February 13, 2007 05:11 PM
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