David McWilliams, in his column in yesterday's Irish Independent, throws up some figures that should make even the most complacent think again about the fundamentals of the Irish economy. He wants to have a go at social partnership saying that, at best it's irrelevant and at worst drives money to sectors should be rewarded least. But it's not his views on partnership that I want to highlight but his take on the economy generally. Take the following:
The central fact in Ireland is that we are dangerously over-dependent on multi-nationals and apart from their activity, we are nothing more than an economy that sells houses to one another, financed by other people's money. We have a serious deficiency of native companies doing well and - although there is no shortage of capital - all this spare cash is going into property.
Property creates no value added, no innovation, no patents and no creative long-lasting capacity. The great consumer/producer brands of the world - Sony, Apple, Mercedes, Walt Disney, U2 - are not made of bricks and mortar but are made of brain power and are creativity-driven. We are not creating any of these brands. In fact, a recent Fortune 500 survey put only one Irish company - Ryanair - in the global top 500.
Leaving out the multi-nationals, the rest of the economy lacks productivity and innovative capacity. McWilliams makes some interesting points about how social partnership feeds into to this process but I'm not entirely convinced. Other open market European countries have managed to combine economic success with sensible social policy commitments by using a form of concertation at elite levels between business, labour and the state. Something like this should continue in Ireland.
McWilliams says "we are being blindly led by the feel-good factor associated with inflated house prices and the political imperative of the next general election". The government pins its re-election hopes on this. The opposition is almost trying to ignore the economy altogether as if its booming success can only benefit the government parties. For Fine Gael and Labour it's a case of best to say nothing in case we frighten the voters. Apart from reassuring them that there's no question of tax increases.
Funnily enough given McWilliams' free-market politics, the dangers of our dependence on foreign direct investment are seemingly highlighted only by Sinn Fein (perhaps for nationalistic reasons) and the Greens. We may yet come to regret this too.
Posted by: DC | June 03, 2006 at 02:33 PM