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David McWilliams had his latest book The Generation Game published on Friday, a day in which Taoiseach (Prime Minister) Bertie Ahern, self-promoted man of the people, was struggling for credibility before a public tribunal, concerning both his non-banking and banking arrangements, when he was Minister for Finance in the early 1990's. Whether or not the Lower Castle Yard, at Dublin Castle, where Bertie Ahern was cheered and jeered on Friday, becomes his Place de Grève, at a generational level, the ancien regime, with its political leaders lacking the vision to implement change in modernising governance structures and the public sector (the Government is awaiting the Paris-based OECD to make proposals on public sector reform), in order to provide a better foundation for the younger generations of workers to withstand more challenging times in future decades, will remain. The recent appendage of the Green Party with its leader John Gormley committed to saving the planet but being incapable of articulating a coherent policy for a small country of 4m people, has not even caused a ripple in the smug status quo. An Irish expatriate termed Irish politicians "shifty horse traders" on David McWilliams' website and wheeling and dealing has its place in politics. To give credit where it is due, Bertie Ahern played his role as "fixer" well in assisting the peace process in Northern Ireland. On the other hand, his role as "fixer" in buying off the public sector unions with sham benchmarking and goldplated pensions is in stark contrast with the majority of private sector workers, who have no occupational pension coverage and who have had to accept much lower pay increases than their public service counterparts. The fact that the politicians have got the biggest pay increases since 1997, tells its own story (Click here for details on sham benchmarking, public sector pay, the corrupt land rezoning system and more).
It is striking that nothing of substance is said about a decade or more ahead. However, many of the generation termed the "Jugglers" by David McWilliams, know that the free lunch hasn't been invented and a prosperity based on a construction boom and foreign direct investment, is not a credible foundation for the long-term. We are more dependent on foreign owned companies today than we were in 1993 at the start of the Celtic Tiger and Irish-owned companies in the tradable goods/services sector of our economy have a minor role. The principal game is still property - international commercial property - for the Irish with money. In the domestic construction sector which increased in headcount from 126,100 in early 1998 to 282,000 in December 2006, more than 100,000 jobs will be shed over the next decade. Maybe some workers will be "upskilled" but many of them will not find jobs in Ireland. Besides, they are earning about a third more than the typical industrial worker and will hardly be keen on flipping hamburgers on the minimum wage.
Most of the members of Ireland’s part-time parliament (Oireachtas) are still on the third month of their holidays. Some may be doing some aspect of their traditional messenger boy/girl role but while the Irish economy has undergone a big modernisation in recent decades, a politician’s life and the system in which they operate in, has changed little from the early years of the State. Today we have 35 ministers and its difficult to know what many of them actually do workwise. The Taoiseach has nine civil servants to run his citizens' bureau and the rest of them have an army of handlers and runners. Minister for Enterprise, Trade and Employment Micheál Martin is in a role where he should be able to provide some hope to the Jugglers but appears to have reached a state where he believes his own spin and his main role is as Minster for Good News. All agencies in Martin's Department have to advise his office of planned announcements. So last weekend, a press release was issued on Sunday advising of Martin's announcement of 75 "high value" jobs in a joint venture supported by Enterprise Ireland. On Monday morning, RTÉ's Morning Ireland radio programme reported on the news that had been leaked to it, that the Minister would be making 3 announcements in Cork relating to 188 planned new jobs that would be created over the coming three years - 40 would be in hedge fund administration where most of the employees would be graduates. As most second level students move to third level, this is no gaisce in itself. Many graduates end up in glorious paper-pushing.
However, the Minister putting three job announcements together may impress the gullible - not an insignificant sector - among the public, but the rest are no fools as to where the real action is. Just in the previous week, Micheál Martin's fellow Corkman Eddie Hobbs announced that a property fund to invest in commercial property in Europe, expected to raise €1 billion. That tidy sum was a contrast with the miniscule €14.67 raised in Irish venture capital in Q2 2007. Then on Tuesday, a day after Martin's earth-shattering announcements, Clonakilty, West Cork-based CMC Capital, a German commercial property investment firm, operating from the small seaside town, announced the purchase of a major Berlin shopping centre for over €100 million. CMC Capital says that it has over €500m under management on behalf of its Irish property syndicate investors. Clonakilty, or Clon as it is known locally, has an additional handle to people from nearby towns such as Bandon (the "Londonderry of the South," "Where even the pigs are Protestant" - click page here and see lower end for further information on Bandon) like me - just 13 miles east the road - with the the term "God help us," which entered common usage in respect of Clon, during the Potato Famine when victims on the way to the local Poor House, apparently used it. The area around Bandon and Clon has rich farmland and its farmers who get about 80% of their income from Europe, never mind the bonanzas from roadbuilding and selling land for development, are investing in German property - Germany is still one of the principal paymasters of the Common Agricultural Policy. The Irish business sector simply gets the crumbs from the investment banquet table and will not be able to take up the slack when foreign-owned firms move elsewhere. The global trend is for manufacturing to move to Asia - the case of the Apple iPod where all its manufacturing is done in several Asian countries, is an illustration of the future model. Will we be able to compensate with design facilities when we lose significant manufacturing operations? Irish investors have put more than €40 billion in commercial property, mainly overseas, in the period 2001-2006, compared with less than €1 billion in venture capital investment in Irish business and while Micheál Martin may continue fooling himself and others about for example the "success" of Irish companies in Asia, the main game is property and will continue to be. (See: Irish Trade Statistics: Policymakers opt for Spin and Delusion rather than confront challenging facts). Besides this reality, there is also another one which shows how much of a pipedream that the goal to be a "world-class knowledge" economy in six years is, when we consider that our top three publicly traded high-tech companies, all reported losses, in recent months. David McWilliams' focus on the challenges ahead is welcome as it's a no-go area for politicians and too many other economists. Ireland's Generation Game - Autumn 2007 on RTÉ ONE Ep1: Mon 17th Sept. 2007, 9.30pm, RTÉ 1 Ireland’s boom is coming to an end. The multinationals our economy is so dependant on are increasingly eyeing opportunities in lower cost economies. The property market is faltering. Personal credit is unsustainable and people are beginning to feel the pain of bad debts. Ireland is run by the Accidental Millionaires, a generation of people aged 50+ who have a vested interest in retaining the status quo and they are about to go to war with the younger struggling generation, The Jugglers. See also: Greencore's Irish operations become property play at time when Irish food industry is faltering Irish Economy - Many short-termists silent on likely challenges in medium to long-term Ireland still has big job to do to become innovation leader says Chief Scientific Adviser © Copyright 2007 by Finfacts.com |
