In the wake of the closure of the American pharmaceutical plant Hospira in Donegal, an op-ed piece in the Irish Independent is headlined "Globalisation means jobs go where wages are lowest". The article, by Alan McQuaid, Chief Economist with Bloxham Stockbrokers, has the usual nostrums about the importance of competitiveness, which simply boils down to low wages.
A spectre is haunting the world economy-the spectre of China. McQuaid says that unless we "put the right structures in place" we will end up like Italy, which he apparently thinks is a near basket case, "struggling in a world ever increasingly dominated by the likes of China". Education schemes and retraining programmes are mentioned in this regard. So a highly educated and skilled workforce is nevertheless supposed to exist happily in a low wage economy? This kind of economic analysis is what sadly passes for common sense nowadays.
We desperately need some alternative perspectives other than a low wage economy enthralled to a version of globalisation which is no more than a race to the bottom to see who can compete with the Far East. In terms of values and vision, the Labour Party pamphlet A Fair Society (PDF download available here) is a good starting point. It's firmly social democratic in orientation but is also realistic and scarcely utopian. But it's short on specifics about what kind of economic strategy should be pursued at the level of policy.
We could do with an analysis of the Irish economy that isn't in thrall to what we might as well for convenience term neo-liberal orthodoxy. Denis O'Hearn's book The Atlantic Economy: Britain, the US and Ireland ( Manchester University Press, 2001) is a good place to start, not least because it reminds us of Ireland's path of dependent development. It also reminds us of the fact that the Celtic Tiger phenomenon did not represent a tipping point whereby Ireland moved from periphery to core in terms of the world economy and that the much vaunted success of recent years is not a decisive break with the past because it is based on a very insecure foundation of mainly US controlled export manufacturing.
The key question O'Hearn poses is how can a country like Ireland emerge from a historical cycle of underdevelopment? Over half a century ago Joseph Schumpeter distinguished between adaptive responses and creative responses. The former might enable you to survive in a hostile environment, the latter might help you gain more control. In the early 1990s, Lars Mjoset in NESC report no. 93 talked about the importance of national systems of innovation and showed that Ireland performed very poorly compared with other small open European economies. We should also critically examine the workings of our model of Social Partnership which is all about keeping wages low and ensuring a plentiful supply of highly trained workers that will be compliant enough to accept them, rather than the European variant of equality of outcomes through social protection. Such themes will be relentlessly, if not obsessively, examined in future posts.
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