April 9, 2009
Let us not forget the current Government caused this messPosted in International Economy · 305 comments ·
Being in the factory in China that makes Irish football shirts is a surreal place from which to comment on the Budget. But bizarre as it sounds, sitting here allows the altitude that is necessary to try to see the big picture. Not that this place is conducive to reflection: it is busy, sweaty, noisy and filthy.
All human life is on the street outside, eating, arguing, living and, above all, filling the air with that most Chinese of cacophonies, the great throat clearing and public gobbing Cantonese soundtrack.
But that said, there is a direct link to Ireland, and looking at the Budget through this global angle throws up a few ideas worth considering.
There can have been fewer people in the world happier with Robbie Keane’s equaliser than the young woman who manages this place. Miss May was delighted. She told me that she was glued to the small set in her local hairdresser last week watching the highlights.
She wasn’t that aware of yesterday’s Budget, but the fact that Robbie buried the ball in the Italian net was enough for her to begin to think about a possible factory expansion next winter.
She talked about whether I thought Bulgaria would stumble, and the fact that the Italians looked through already. We chatted, sitting on small stools, listening to the whirr of sewing machines as the workers giggled at the sight of a redhead.
About three months ago, after a miserable affair against Cyprus in Croke Park, I’d set myself the target of finding the factory that makes the thousands of Irish shirts that clothe the Green Army. I wanted to join the dots of the global economy and see for myself why a goal in the last minute in Bari can have a profound effect on the employment prospects of millions of poor workers in China.
Yesterday, on the day of Brian Lenihan’s Budget, my journey is over.
After many calls and false leads from retailers to wholesalers, to dye factories and middlemen, I have finally reached my nirvana. Away in a back street called Station Road, in the small Chinese town of BiLung — the knickers and bras capital of the world where expensive La Perla, Myla and Agent Provocateur lingerie are churned out — lies the factory that makes our shiny, acrylic kit. The workers get â‚¬9 a day and the shirts leave this place costing less that â‚¬1 each.
The fact that they retail for about â‚¬50 at Dublin Airport means someone along the way is doing very well. On either side of the street are dormitories, that house the workers who get bed and board and spend all day in the local internet cafe which doubles as a snooker hall, a bookies and a down-at- heel nail bar.
All the workers are from the same village in the interior of China. They appear happy enough with their lot. They know their Robbie Keane from the Roy Keane; they know their Man Utd from the Tottenham Hotspur; but they haven’t a clue where Ireland is.
And this is the point, Ireland is so small in the overall scheme of things globally that nothing Mr Lenihan did yesterday will remotely affect what happens to the pace of our recovery in the coming years.
In fact, the risk is that it accelerates the downturn.
I am not suggesting that he should have done nothing. In fact, here in China, where chess is very popular, chess players might realise that Mr Lenihan is in a position called Zugzwang, which refers to a carefully orchestrated manoeuvre where the victim is left in a position where he has to move, but any move he makes renders him worse off. He has nowhere to hide.
When all the lines have been scribbled, and all the talk has been chattered, we in Ireland need to accept that the world is in the grip of a violent recession and that we will sink or swim with it.
Let’s look at the big picture. This Government caused this mess. These are more or less the same people who, for their own sleveen ends, destroyed the country. Let us not forget this.
Ireland has bankrupt banks that have been destroyed by a mad bet on property. This mad bet on property was made look convincing by enormous amounts of credit that flooded into the economy between 2004 and last year.
But obviously there was cause and effect. The credit binge was being driven by the banks borrowing from the money markets to inflate our property boom with other people’s money.
This credit binge, not government policy, made the coffers overflow, and the pathetic thing is that the Minister for Finance at the time, Brian Cowen, did not appear to understand this basic economic fact.
What’s worse, the Department of Finance mandarins didn’t understand it either. (In fact, I remember making this crucial point on ‘Questions And Answers’ in 2005, ahead of the Budget, with the then Minister for Finance on the panel, and being told by the host, John Bowman, that he’d had ‘enough of the economics lecture’. This just shows the level of questioning entertained in public in Ireland during the boom years). Now we are paying for our lack of economic rigour.
Writing from China, where trade is everything, it seems that the best thing the minister could have done yesterday was to make sure that Ireland can trade its way out of this mess.
Do nothing to the economy that might make it more difficult for us to make things for sale on the international market. Did he do that?
No, he clearly did not. This is a Budget that raises taxes across the board. And, unlike the suggestion that was made here last week about the banking bailout, where it was argued that we could have done this at zero cost to the taxpayer, the bank bailout will impose enormous costs on the rest of us. The minister could have gone to the ECB and structured a deal. He inexplicably decided not to do so. Make no mistake about it, the economy will contract dramatically as a result of this Budget.
Back in China where trade continues, luckily for Miss May, Mr Lenihan is not the manager of the Irish football team or demand for her wares might be be hit.
Mr Trapattoni knows what is demanded to compete at the highest level with limited resources. Unfortunately, in economic terms, judging by his performance yesterday, Mr Lenihan has shown he doesn’t even understand the offside rule!