September 5, 2006

All Politics Are Local

Posted in Ireland · 4 comments ·

What for you was the biggest event of the last few days? The thrilling All Ireland hurling final, the brilliant Electric Picnic at Stradbally, the plucky but doomed football display in Stuttgart or the government’s “think in” in Westport? Yes I thought so; Westport didn’t figure much, despite getting wall to wall coverage on radio and in the papers.

At first glance there appears to be little to link these events but in fact, in their own way, all are indicators about the future of the country. While the government’s “brain storming” session – if we can call it that – might try to offer concrete examples of how the country can move forward, we all know that in their hearts and souls, TDs are only interested in the local. They will stand or fall on local issues, which is why the general election winners will be those with the most microscopic rather than telescopic view. It will be a victory for the man with the narrowest world-view rather than the one who sees the big picture. As such, the “think in” tells us little about where the country should be positioning itself in the global economy in the years ahead.

Yet where this country positions itself is the most crucial question we need to address. Just like you in your job, the key to keeping ahead of the posse is to find a niche at which you are better than the next fellow. Once you find that, you gain a reputation, no matter how limited, as being the person to go to for the best service. This means your business builds and then you can charge an extra bit more for your time and ultimately, you begin to generate the extra cash or earn the extra status that keeps you ahead. Economically, countries operate in just the same way although on a myriad of levels. The focus for industrial policy should not be about keeping open industries that can’t compete (although that may be a politician’s natural urge) but rather to assess what the country is best at and to go for it.

Over the past twenty years, our policy of targeting hi-tech has been phenomenally successful. However, that was before India started churning out more graduates per year than we have people and before all trade barriers were dropped. Today with free trade, free movement of capital and cheap Indian engineers who are prepared to work 24/7 for a fraction of our minimum wage, we need to think up another plan. What can we do in Ireland that others cannot do? How can we protect ourselves from this hyper-competition which is being led by India and China?

Given that the objective of a successful economy should be to raise the living standards of all of us and that the best way to increase living standards is to raise wages across the board, what can we sell that will give us all the biggest payback?

This is where the All Ireland and the Electric Picnic come into the frame. Both sport and music are examples of successful industries of the future. Over the past few years, as this country, together with the rest of the West has become more affluent, we have changed our buying habits. We are all starting to buy “experiences” not just goods and services. A new “experience economy” is beginning to emerge. This can be seen everywhere you go in Ireland. Whether you are in a caf� which offers authentic Colombian coffee or you head up to Dublin for the match with your tribe or you are one of the 35,000 who spent �175 to go to Electric Picnic to savour the atmosphere, see the bands, hang out with your friends and tell the story when you come home. These are examples of the experience economy – where the things you buy are memorable. “Experience” shoppers are buying things that reinforce the type of people they are, which put them into a certain tribe which gives them pleasure over and above the mere thrill of possession.

The flip side of this new type of buying which puts experience far above the old fashioned, nouveau riche yearning for having the biggest, the brashest or the flashiest is that someone has to provide these goods. There is now a great opportunity for someone or some country to produce stuff that not merely satisfies a need – such as a good, functional laptop – but gives people the sense of an experience which gets inside the head of the affluent consumer and defines them.

The key areas for this type of industry are music, sport, culture (in its broadest sense), film, theatre, advertising, architecture and marketing – any business which draws on experience which leaves people with memories. These creative industries are rather intangible and do not easily fit into economic boxes. For example, in Britain the creative industries account for 14% of GDP, yet are rarely spoken of in political discussion. This is the dilemma for the creative sector – the language of economics which has elbowed out almost all other dialects in modern political discourse is not equipped to deal with the “experience economy”. Modern economics is not capable of articulating or valuing soft economic power.

The crude vernacular of competitiveness, wage rates, productivity and exchange rates does not translate readily into soft economic power. Yet soft economic power will be crucial to Ireland’s well-being in the future and we ought to get a handle on it very quickly.

What is soft economic power? How is it different to hard economic power? Hard power is nuts and bolts power. It is the economic prestige that derives from the manufacturing industry. It is measured by league-tables of output, by comparative GDP figures and by productivity measurements published each week in the back of the Economist. Hard power is gauged by multinational investment records and figures explaining repatriated profits. We have been extraordinarily successful in this sphere, but now, we will have to cultivate soft economic power – the power of the experience economy.

This means ploughing State resources into the arts, literature, and music – all the areas where we have something unique to say and sell. It also implies at a much deeper level changing the education syllabus for every child in the country. We already have -rightly or wrongly – an image of being writers and storytellers and this could easily be turned into a selling point which could make Ireland the world’s centre of excellence for advertising, marketing or publishing. If we managed to move Silicone Valley to Leixslip, why not aim to move Madison Avenue to Merrion Square?

Soft economic power can be seen as anything that results in enhancing the well-being and bargaining position of Irish people over and above the wages we earn now. Unfortunately, in a globalised world, our wages in many areas will be capped not by partnership negotiations but by Indian engineers – so we have to think again.

Ireland of the future could be the creative hub of Europe. We speak in English – which is a huge selling point – we have the people and the talent, all we need now is the vision.

  1. pwren

    Dear David
    I read from time to time some of your articles and enjoy
    your opinions. This one seems optomistic that there is
    still some hope left for Ireland even if it is the road
    least travelled. I left Ireland like many in the 80′s and
    spent many years travelling, working, earning and enjoying
    not necessarily for the same reason as my counterparts
    whom left Ireland because of employment issues at the
    time. I am back now in Ireland approx. 12 years once again
    like my counterparts to buy the house, settle etc. I am
    self-employed and myself and my husband run our own
    businesses. We are not afraid of hard work and I dont
    worry easily over bills, these days I feel different I am
    definitely tiring of the constant battering that comes
    with being selfemployed. We have recently undertook a new
    venture and it seems no end to the worms in the woodwork
    wanting a piece of nothing! I have just returned from
    Poland which I am aquainted with and where we ate 2kebabs
    and 1coke for the equivalent of 6euros. I realise Poland
    has momentous years to come in terms of its economy,
    hoewever I also have colleagues in America and the picture
    isnt too unsimilar. What I am trying to say I suppose is
    that I cant help feeling everyday this sense of being
    ripped off permanently. I now will source anything outside
    Ireland for quotes if possible and in some instances
    including transport costs this has proved to be cheaper. I
    have this feeling that Ireland will need to try extremely
    hard to change this pattern around. I believe in sourcing
    locally in theory however the reality can be sometimes
    triple the cost! I am now considering travelling again
    this time with my family because I dont want to be part of
    what Ireland is becoming- except this time if I take the
    step to emigrate it will be because of employment issues.
    Have we come full circle again? I have always been
    positive about promoting about Ireland however I dont
    think that I can do that truthfully anymore, I dont think
    I am on my own with this opinion I know lots of people who
    are just totally fed up with this battle to survive.
    Can I just add the my biggest event of the last few days
    was my youngest child starting school, decked out in his
    uniform, school shoes, bag, lunch box, pencils,school
    books, school tracksuit etc, he looked like a small
    fortune walking walking down the road to school…it was
    lucky he wasnt mugged!!!(It never ends)

  2. P Hughes

    The above article kind of anwers my question as to why the
    green party always do so poorly in elections. Im not a
    member but i always vote for them and can never understand
    why more people don’t vote for the only party concerned
    with the environment, waste problems and public transport.

    I think peoples party choice are hereditary, my dad always
    voted FF so i’ll vote FF.

  3. Amos

    This is a truely great article.
    I hope other readers and commentors will appreciate it.

  4. Hi David,

    Your article has made a solid argument for more investment in the arts in Ireland. Political rhetoric is also mumbling something about the need for extra investment, but without actually making any significant financial contribution to this growing sector.

    Would you believe that if an Arts organisation in Ireland goes 3% above break-even point, that they have to explain themselves to the Arts Council, and run the risk of having their core funding reduced? (Check out the small print in the Arts Council website for details.) Most Arts organisations seem to be operating on a shoestring anyway, struggling from grant cheque to grant cheque.

    I’ve put a link to this article on my website, because I think that everyone writing for film, television, radio and new media should read it.

    Keep up the good work, and I hope you discuss this topic in more detail in your forthcoming book!


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