October 14, 2007

The future could be so bright

Posted in Celtic Tiger · 14 comments ·

If we pursued a more open-minded policy with regards to immigrants, the diaspora and planning, Ireland could have a more stable long-term economy.

The Financial Times is running a very odd ad this week which demands a double take. It shows a contemplative Mikhail Gorbachev in the back of a taxi, driving past the Berlin Wall.

Almost 18 years after the wall fell, the strangest thing about this image is not the familiar ex-communist boss beside the most evocative monument to the bankruptcy of his ideology. This would be predictable enough, and Gorbachev had the good sense to recognise the economic cul-de-sac of the command economy before most others.

The weirdest thing about the photograph is that, on the seat beside him, is a Louis Vuitton bag. Gorbachev is the star of an ad for Louis Vuitton – the ostentatious bag-maker. So here we have the last Soviet communist leader promoting probably the most conspicuous example of everything that his ideology railled against.

This volte face is yet another example of how the new world of globalisation demands that we rethink some of our assumptions about what is, and what is not, possible. Twenty years ago, had you suggested that the general secretary of the Soviet Communist Party might front ads for the most frivolous, fashion-driven consumer goods, you would have been laughed at.

Now, with these enormous changes in mind, consider the proposition that over the next few decades, Ireland – a country which has experienced a demographic catastrophe – might follow an explicit policy to increase its population dramatically, reversing the trend of the past century and a half.

Many people might ridicule the idea that Ireland can absorb an increase in its population over and above what we are experiencing at the moment. Others would go so far as to say that we can’t even cope with what we have, so how could we cope with multiples of our present numbers?

Just park your scepticism for a moment because, in the years ahead, the most radical economic tool we will have at our disposal will be demographic policy. As this column has argued before, people are the key to the future and absorbing people who are both culturally compatible and economically progressive would seem to be a logical step for our country. This would give us the advantage that we need. Ireland could be a host for international brain power.

Thus, as a result of both bringing back some of the diaspora (which is the right thing to do for historical reasons) and having an active immigration policy that aims (like most immigration policies do) at strengthening deficiencies in the labour market, Ireland could stay ahead of the pack. But could we do it?

The answer is yes. All you have to do is drive around the country to see how empty the place is. Ireland is among the least densely populated countries in Europe. In 1841, Ireland had a population of 8.2 million. England had a population of just over 14 million.

Today, the island of Ireland has a total population of 5.9 million, while England has a population of 50million.This implies that, since 1841, the English population has expanded three and a half times.

If Ireland had the same population trajectory since the famine as England had, we would have a population close to 29 million. Can you imagine what the country would look like?

If you think the English example is not applicable, let’s examine some of the more populated European countries. For example, Ireland has a population density of 60 people per square kilometre. The Netherlands has a density of 393 per square kilometre. If we had a similar population density as the Netherlands, our population would be 33.4 million.

Even if we were to have the same population density as Germany, at 233 per kilometre, there would be close to 20 million people on the island and 14 million in the Republic. A density close to the EU average would imply an Irish population at least double what it is today.

Before we discuss how an increase in our population might be engineered, just consider how empty the country is today. Despite all the talk about congestion, Ireland is vacant. If you catch the train from Dublin to Cork, for example, you will be struck by just how spacious the country is – all there is on either side of the track are miles of largely empty fields.

This is an amazing resource and, if looked on from a demographic perspective, it is an enormous waste of habitable land. These large open spaces also reveal why the recent property boom was so unnecessary. There is no shortage of land here.

In fact, there is an enormous surplus, and this structural surplus explains why only restrictive planning can prevent the price of land from falling precipitously, now that the land scam has been exposed and prices are headed downwards. (Ach sin sceal eile.)

Instead of focusing on the next year or two, let’s look to the future. An active demographic policy would start by giving the diaspora passports and continue by having positive discrimination to those immigrants with the skills we need (which is the type of policy followed by mature democratic societies like Canada and Australia).

This would greatly enhance our labour force and could galvanise government thinking around a national plan. Many of the pieces are in place already. For example, in the course of the next few years, the motorway expansion programme, if fulfilled, will dramatically alter the geography of Ireland.

If we fix the transport system, then the country will open itself up and the gravitational pull of Dublin will begin to wane. This will allow the rest of the country to breathe. But this will not happen by itself. It needs to be directed from the top and it should be accompanied by a commensurate demographic policy.

Many ‘empty’ countries have had targets for national population before, with great success. The most obvious are the US, Canada and Australia. (Nor do we have a native population that would need to be harassed into reservations to make this happen.)

The Israelis have followed an ethnic immigration policy, where every Jewish person in the world is given ‘‘the right to return’’. This has been at the expense of the Palestinians, but as we have no ‘‘Palestinians’’, an Irish right to return would threaten no one. If managed properly, the more people we have in the country, the more dynamic it will be, with a greater sense of a national project.

A realistic demographic target for Ireland over the decades ahead would be a population of 10 million by 2030. This would involve building new cities in the empty midlands, greatly expanding the Galway, Limerick, Cork corridor and linking the entire project with a system of railways and motorways, so that no two urban centres are more than two hours from each other.

Years ago, I studied in Bruges and was amazed at how many locals commuted to Antwerp by train. The reason was simple: it was relatively hassle-free. The Belgians built a train system around their major cities, creating a country where everyone was on the move, but no one seemed stuck anywhere in particular.

We could take these examples and organise and plan accordingly. This would give us something to aim for and would be the blueprint around which we could frame all our planning. It would also send a signal to foreign investors that we are serious about increasing the economic capacity of the country and its labour force.

In addition, from a cultural/historical point of view, we could close the demographic circle that began with the famine. The population of this country fell because it was allowed to. The future population growth could be guaranteed, because it would be cultivated.

So instead of having economic growth as the objective and allowing planning to catch up, we could have a demographic target as the objective, plan accordingly and allow economic growth to catch up.

There is plenty of room in the land for an active immigration policy – all we have to do is make space in our minds to contemplate it. As the Gorbachev episode with Louis Vuitton reveals, things do and can change quickly. Once we have done this, organisation will be the key. But there is no divine law that says the Irish can’t do planning; it is just that we have not bothered to focus on it.

The Dutch have an expression that ‘‘if the Irish lived in Holland, they’d drown, and if the Dutch lived in Ireland, they’d feed the world’’.

Let’s aim to repopulate the country, reverse the demographic deficit of the famine and prove those Dutch wrong.

  1. Alun Carr

    Improving transport infrastructure will not lead to a delocalization of population from Dublin. Look at Britain: for no good reason (with modern communications systems, the majority of the industry could be located anywhere on the island of Britain, with no ill effects), the population is concentrated in the south-east of the island, centred around London.

    If the population of Ireland grows, then Dublin, like London and its environs, will grow disproportionately, and gather more of the weath to itself, and fuel internal tensions within the nation.

  2. David said:
    “This is an amazing resource(the empty countryside) and, if looked on from a demographic perspective, it is an enormous waste of habitable land. These large open spaces also reveal why the recent property boom was so unnecessary. There is no shortage of land here.”

    “In fact, there is an enormous surplus, and this structural surplus explains why only restrictive planning can prevent the price of land from falling precipitously, now that the land scam has been exposed and prices are headed downwards. (Ach sin sceal eile.)”

    Problem is David, restrictive planning has not gone away.I had an acquaintance (now deceased) who owned a sizable acreage in Dublin West about 7 miles from the city centre, and fought for years to try and have it rezoned for housing.he was 80 years of age when the Celtic Tiger growled and the councillors belatedly rushed to rectify the consequences of restrictive planning, and his land is today covered with housing estates. He told me-before he died- that a friend said to him one day:”Do you know Tom the reason you never got planning permission to build?-you were in the wrong political party.!
    (He was a Fine Gael supporter)
    Does anybody believe things have really changed.? Look at the list of developers who get the Luas extended to facilitate their huge land bank or other projects. Look at the suburbs earmarked for development during the next decade.who owns most of the land in these locations? I give you one and only one guess..
    Are the remaining land banks in suburban Dublin owned by a small number of immensely wealthy people(supporters of a certain political entity?)
    Have they the amazing power to manipulate prices by pulling back on development when prices begin to fall?

    If this is so, then they can manipulate the housing market and ensure that people who cannot afford to buy will still be paying huge rents, on the rental market.!

  3. Thomas Kerlly

    The Dutch have an expression that “if the Irish lived in Holland, they`d drown, and if the Dutch lived in Ireland, they`d feed the world.

    Was it not Bismarck that said ” Give Holland to the Irish and they`d lose half of it, give Ireland to the Dutch and they`d feed half the world?

    Tom Kelly

  4. MK

    Hi David,

    > There is no shortage of land here.

    Yes, its true, Ireland does have enough land space to comfortably sustain a much larger population and 20 million on the island is feasible. And Ireland could use ‘demographic’ policy to keep the population increasing, as it has been doing in recent years/decade.

    The only problem I see is the ‘all roads lead to Rome’ effect, in our case Dublin, which would make life uncomfortable (or at least less comfortable than it could be) for a vast majority of people. Ireland’s policy of growth has been centred around one economic centre, mainly, and that’s Dublin and other centre’s have only grown (Cork, Limerick, Galway) because they are far enough away to have their own momentum.

    The rising levels in the economy have lifted all ‘boats’, but I dont see vast swathes of people being able to live economically where the ceide fields were. To do so requires a very strong set of real decentralisation policies, rather than the lip service that’s been given. Indeed, a moratorium on the building of dwellings in the GDA would force any growth to occur elsewhere. However, that would make Ireland as a whole less attractive and many (everybody?) wouldnt want to see that. eg: Google said, Dublin city cente or nowhere else – they got their way.

    The UK example of the London and the South East conurbation is what we will be getting when growth occurs. And these conurbations are at the disposal of most countries, such as the Rhine-Ruhr and Randstad. My gut feeling is that this is what most political parties (FF, FG and Labour) actually do want ie: growth in Dublin to occur. The wild mountains and bogs fand ields of Ireland will in the main remain wild and empty, and people can visit them on the weekends, when they have their shopping done of course and if the weather isnt too bad.

    Also note that Paris is about the same size as Dublin in square kilometres, so the wide open fields of Fingal and the flat 2-storey level of Dublin will be infilled and made higher density first, whilst there is no ‘deterrent’ in terms of policy and regulations.


  5. DD

    In 2006, the population of England was 390 per square Kilometre. Ask anyone who has lived either all, or part of their lives in England and they’ll tell you that it is grossly overpopulated, a nation of housing estates, out of town shopping, where cultural and familial values are dimishing and people are now forced to ‘live to work’ and no longer ‘work to live’. Does Ireland really want to follow that lead? I hope not.

    Another problem here in Ireland is that while property prices may be falling marginally, the banks are still publicly trumpeting their own well polished sales pitches by ‘talking up’ the mortgage crisis and how great they say things are again now that interest rates have (allegedly) peaked, so they tell us.

    However, isn’t it ironic that there is never a mention by the very same institutions of the biggest problem that befalls any Irish citizen, resident, or immigrant who hopes to live here, work here, and buy their own home here, eventually, is the brutal fact that property across the nation will cost between 10-12 times the average income . And as long as there continues to be such an obscene gap between propery prices (not to be confused with true value, let’s face it) and income, the appeal of the Irish Republic for anyone to settle in will be a short lived fantasy at best.

    The average mortage income multiple is (officially) 4.5x single or joint incomes. All very well for a couple of lawyers on €70K+ per annum to buy property. But what about the averqage man or woman in the street? What about single people in a modern day society where one in five adults now live alone? Ireland is heading towards a situation where it will become a nation of tenants. Not a bad thing in many countries. As far as I’m aware, 58% of the French population are renting. But then rents in France are a lot more affordable than in Ireland (or the UK for that matter.) There is nothing wrong with renting, IF it still gives you a quality of live. But, this nation of rapid expansion in the tenancy market, is a nation of people forced to share with relative strangers. The modern day extended family is now becoming an extended family of housemates and flatmates. Is that really the way forward?

    Great news for landlords I hear you say? Great news for property investors too? Not anymore, not with declining yields. Recently there has been a trend of landlords increasing rents to ridiculous levels (Ballsbridge rent levels as far out of Dublin as in places like Shankhill no less.) Why? Because these are private landlords who are struggling to cover their own mortgages and are trying to pass on all costs to the tenants. And no, it isn’t acceptable. As interest rates have increased i the last 18 months or so, then so have rent levels, yet you can guarantee that they won’t be rushing to lower them again IF the interest rates ever do come down again (don’t hold your breath.)

    The knock on effect of this is a knife-edge scenario. Dell anounced some time ago that it was moving into Poland. What happens if Dell sometime decides to move out of Ireland? What happens when the majority of the hard-working Polish immigrants realise that the bubble in the construction (home building) industry is really beginning to kick in. Does anyone really think for asecond that they will all stay here in an expensive rental market? Unlikely.

    I’m not sure if anyone really knows any, or all, of the answers. But, unless the acquisition of property can become a much more affordable possibility here in Ireland, I don’t see the Polish (or many other people) staying for that long and unless there is a major property crash, it will only take a minor blip in economic circumstances to kick off another micro-exodus to yonder shores, to cheaper homes, and to a country where greed is lower on the agenda than people.

    The Celtic tiger may not be dead, but it’s definitely limping.

  6. AM in Belgium

    It’s interesting to see that most people, when making comparisons to high-density living, compare to the UK, and the London area especially.

    Why does Ireland have to blindly ape everything that the UK does? We’ve been a republic for 60 years – surely in that time some people must have learned to cut the apron strings and make decisions on their own.

    Having lived in Holland, where the population density is high, it was actually quite nice. Public transport was effecient. Shopping areas were central, and not out of town, and there was still plenty of countryside left for people to enjoy.

    But please… stop looking to England all the time. Things there really are not a shining light example.

  7. DD

    AM, nobody is using England as a shining light example. David used comparisons to both The Netherlands and England (not the UK) as precisely that, a comparison, and for the sake of nothing more than statistical analyses. I have never visited The Netherlands myself, but had lived for many years in England. My comparisons, if you read them correctly, are the polar opposite of using England as a shining light. David’s article has nothing to do with Irish-UK, Anglo-Irish, or any way you want to put it, relations. Neither is it about Ireland becoming a Republic, so there was no need to even bring that into it. Specifically, David’s article is about moving Ireland forwards as an economy. My own points were geared toward the vastly over-inflated property market and how that may well affect Ireland’s economic direction. A market in which, in all honesty, a crash is not only imminent, but also welcomed in many quarters, as the absolute chasm between average incomes and property prices is now untenable and is beginning to push people living here to look abroad for a better quality of life.

    England and The Netherlands have very similar population densities. Ireland, less than a sixth of either country. But, should Ireland go for mass immigration to bring the population up to some 20-25 million? I certainly hope not. One of the key attractions of Ireland is it’s natural beauty. The English countryside used to be that beautiful too, but not anymore. Now, it’s a maze of ‘Brookside’ estates connected by motorways, and you can’t move for yet another out-of-town outlet opening, be it PC-World, KFC, M&S, Sainsbury’s, you can’t breath for another speed bump, camera, or CCTV. And all in the name of progress. And while there is a definitive need to discuss and debate Ireland’s economic future (especially considering the current status of the property cycle) and how we should build a better future for ‘Everyone’ (and not just for those in power,) Do we really want Ireland to become the same?

  8. Laura Farrell

    I believe, having read it somewhere, but unsure exactly where, that the sweet spot for population in ireland would be around 28 million.

    Would it not be a very different country though? More like Japan I would guess. There is certainly a huge case though for repopulating declining areas like the west and north west.

  9. DD

    Exactly. At 28 million, the population would be around 390-400 per Kilometre and therefore, like other higher economic powers, Ireland would be far too densely populated. An Ireland such as that, and like other highly sucessful economies, would have an elitist wealth bracket where 6-8% of the population would own and control at least 80% of the wealth.

  10. JJ Tatten

    While I agree wholeheartedly with your views on the ludicrous state of the Irish property market and its much vaunted imminent implosion, I’m afraid I must disagree with your view of England and its perceived urbanisation.

    It is a common misconception that rural England is in danger of being ‘concreted over’ – a notion that pressure groups such as the CPRE (Council for the Protection of Rural England) and the National Trust have been highly successful in embedding in the English consciousness.

    - Between 1997 and 2004, England’s Green Belt increased from 1,650,000 to 1,678,200 hectares (an expansion of 1.7%). Green Belt land now comprises 13% of total land in England. (CLG local planning authority green belt statistics, January 2007)

    - Only 8% of land in the UK is classed as urban, half the figure in Holland and lower than Belgium, Denmark and Germany. (‘Unaffordable housing – fables and myths’, Policy Exchange Report, June 2005)

    - Even an extra 120,000 homes being built per year in the South East – four times the current rate – would only use an additional 0.75% of the total land area of the South East over the next ten years. (‘Review of Housing Supply – Final Report’, Kate Barker, March 2004)

    In truth approximately one third of the population live in the seven largest urban centres, which account for less than 2% of the UK land mass – these urban-centre land figures also include docklands, wasteland and other brownfield sites. The planning trend towards out-of-town shopping has been reversed for a number of years now in favour of city centre and brown-field redevelopment. As for the speed cameras, CCTV footage and road humps they exist only in high-density areas and accident blackspots and have been proven to save lives – something the NRA might care to consider.

    Those who view such ‘traffic calming controls’ as an infringement on their civil liberties have nothing more than a thinly-veiled desire to impose their self-indulgent driving obsession at the expense of the liberties of the majority.

    Brookside-style housing does exist – but again that is no longer the norm given the huge strides made in housing design and construction methods – a far cry from the Sovietesque monstrosities erupting out of scrubland on the fringes of towns throughout Ireland.

    Urbanisation can be achieved with minimal impact on a sparsely populated country such as Ireland. It desperately needs the by-product of a broad skills base that re-population would bring. Besides, the nation will need more people to fund the retirement and inevitable decreptitude of the ‘Pope’s Children’.

    However, as you rightly state, the current appeal of the Republic is limited by the housing price farce – so re-population will be very difficult to achieve.

  11. Steve

    In Israel housing has been viewed as the lead issue for the returning diaspora.

    There, the state controls most of the land reserves and there is very little private land: Over 90% of the Israel’s land area is in national ownership.

    During peak periods of immigration, large tracts of national land could be made available at zero or near-zero cost and immigrants could be assured of very low cost rentals or small subsidised mortgages.

    Even if the housing was initially on the basic side, the immigrants could at least be assured that putting a roof over their head would not entail a near lifetime of debt to enrich those that happen to be already present in the country.

    If Israel had allowed the housing market to spiral out of control as it has here, their immigration policies would likely have failed.

  12. john

    “A realistic demographic target for Ireland over the decades ahead would be a population of 10 million by 2030. This would involve building new cities in the empty midlands, greatly expanding the Galway, Limerick, Cork corridor and linking the entire project with a system of railways and motorways, so that no two urban centres are more than two hours from each other.”

    I strongly disagree with most of this article, I do not agree that it is advantageous that ireland pursues massive population growth and immigration. You have chosen britain and the netherlands as two examples of population density and compared ireland to them. However these are two of the most densely populated countries on the planet. Yes they are successful countries but population density and economic success are not interelated. The United states has a much lower population density indeed i think ireland and the US have similar densities. Australia and Canada are at the opposite end of the extreme with very low population densities and these have successful economies.
    I think it would be a disaster if ireland tried to follow the Uk example firstly we would not be able to organise planning and infrastructure to handle it.From the start of the irish state this is something we have been terrible at. Look at the mess with the population we now have. Secondly if you are trying to attract the diasporo they are not going to be attracted by a mini britain with the irish countryside concreted over, indeed we have done alot of damage as it is. Sure doesn’t every councillor think the country is empty and sure what harm would another shopping centre or housing estate done. Also the irish countyside is one of our only natural resources and has some of the best growing conditions on the planet, this should be by and large preserved. If you ask any briton they are not exactly jumping up and down about their high population most would have preferred a much lower population maybe 30/40 million. It is because britain was a former colony that it felt obliged to accept so many immigrants from former colonies it wasn’t something the went out of their way to achieve

  13. Scruffy

    Get back to work Laura.

  14. DD

    JJ, I appreciate your comments on the property market, though I fear you are perhaps ‘dressing up’ the whole English green belt and house building issue with statistics that have little bearing on a cold hard fact. England ‘is’ vastly over-populated! England has a density of population which is 6.5 times that of The Republic of Ireland. Argue with that if you will, but the fact is the same whichever way you wish to spin it. Six and a half times! If you really believe that England is this green and pleasant pastural image that you portray, then I fear you are mistakenly either deluded, or perhaps work in the construction industry.

    Also, on another level, the whole problem of global warming isn’t exactly helped by such a rapidly increasing global population either. So in answer to earlier comments, should Ireland really join the frey and call for mass immigration? No. Should Ireland be more competitive? Absolutely. But alas, we live in a world where greed and power both rule supreme, and Ireland is no exception.

    with regard to immigration here in the Republic. I was talking with a group of Polish acquaintances recently. Out of curiosity, I asked if they thought they would settle here eventually. It wasn’t such a surprise that they all thought the price of property would always be out of their reach here and that they either intended to buy or build in Poland in time, and in one case, was planning on saving enough to set up a business, but again this would also be in Poland.

    I am curious what David’s thoughts on this are, as in all honesty, unless the property/income gap drops to an average of 4 times average income (which I can’t see happening, I truly believe that things can only get worse.

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