Are we coming to the end of an era? Will the world’s economic geography shift dramatically in the next 20 years? What if the action does, in fact, shift to Asia?
For the past 50 years, the North Atlantic has been the place to be. This was the epicentre of the known world. Ireland has been ideally placed between the United States and Europe – the world’s economic superpowers.
This geographic and cultural sweet spot has served us well. It allowed us to play one off the other. We provided the Americans with a bridgehead into Europe – taking more than 100,000 high-tech, high-income jobs in the process.
At the same time, we played the good European, first availing of EU structural funds and later its savings. The credit expansion that has buoyed us in the past five years is a direct consequence of EMU and, in particular, old Germans’ surplus savings.
All told, we have played both sides off each other extremely deftly and, in the process, created a strong vested middle class.
In the 1970s, Ireland’s economic policy was all about attracting foreign capital. At that time, it would have been considered a positive outcome if Ireland’s economic policy by 2006 produced – as it has – a reasonably tolerant society with higher and more equal incomes and far more people having a stake in the place than before.
In our changing world, how can we protect what we have achieved and improve the place? How will we react to the changing geography of the global economy when the centre of gravity shifts from the North Atlantic to the South China Sea? This is the big question.
At the moment, we are fully paid-up members of the EU, and this has been our passport to prosperity, but the relationship might change in the next few years.
The EU is expanding ever eastwards to countries that are dying. The demographic reality of central and eastern Europe is not very reassuring. According to the World Population Reference Bureau (www.prb.org), the population of every country in eastern Europe will fall by an average of 22 per cent in the next 50 years.
Poland’s population will fall by 17 per cent, Bulgaria’s by 34 per cent, Romania’s by 29 per cent and Hungary’s by 11 per cent. In the Baltics, the populations of Estonia and Latvia will fall by 23 per cent each, and Lithuania is forecast to lose 17 per cent of its present population. The biggest fall will be in Russia where there will be 32 million fewer Russians in 2050 than there are now.
Granted, these trends might change, but they are stark and should be factored into our calculations as Ireland is forecast to increase its population by 12 per cent. The reason these demographic statistics are so important is that they set the tone for the economy. Old economies don’t grow, and dying societies don’t grow at all.
Eastern European societies are dying.
They will not achieve the economic growth rates necessary to lift the continent.
In addition, the social welfare bills of older societies are enormous. So we will be left with old, high-tax countries all over eastern Europe. If this is the demographic future of Europe, don’t you think we should make economic provisions for it?
This means – in narrow economic terms – that Europe will be a net capital exporter for the next few decades. In contrast, the US will continue to grow demographically, while Asia will do likewise.
It is highly likely, therefore, that the action will be in the South China Sea, Indian Ocean or Pacific basin area. So what are we to do?
The worst thing we can do is to hitch our entire wagon to the EU. We should now be thinking in terms of alliances with the growing regions of the world. We should also be thinking about attracting to Ireland the best human capital available because the next economic battle will not be about money – it will be about people.
At the moment, we have the rather ludicrous situation where we are putting Chinese students through our universities, educating and training them and then asking them to leave the country when they qualify. If we are prepared to have them working for Spar, why not for Intel?
Likewise, with our Polish and other eastern European immigrants, we should be trying to make use of the qualifications they have but are not using. How dumb is it for us to have qualified paediatricians working in canteens, architects labouring at hot-food counters and engineers gardening?
Remember, the cornerstone of our economic policy in the 1970swas to attract capital. We didn’t have any, so we made it cheap by giving it a tax holiday. We played beggar-my-neighbour with our tax system and won.
Today, people are the precious asset. So we have to keep the best of our own and attract model citizens from all around the world. This will keep us ahead of everyone else.
To do this, we have to remain highly flexible and avoid rules. A logical fear is that an atrophying Europe will set barriers to discretion and will become more rules-based as it tries to protect what it has. I hope this is wrong, but it might not be. In this context, Ireland might need to think of a plan B.
To get a glimpse of societies that figured out the next big move in the global economic game of chess we have to go back to the city states of the medieval ages.
These places, like Venice, Dubrovnik and Hamburg, created a series of alliances with the big powers.
However, at the same time, they remained aloof, suiting themselves and played the big guys off each other. The key to their success was non-committal flexibility.
As the world changes, we could do worse than look back to history. After all, despite our claims about the uniqueness of our times, everything has happened before. It is just history repeating itself.
Bravo, David! I plan to share this with my students! I teach for Upper Iowa University.
In a country with 38 million, Poland in fact is booming, albeit from a low platform. FDI is up 500% since 2002 and growth is expected to be around 7% this year slowing slightly next to about 6%. However the building boom has only begun and is expected to grow significantly over the next few years as the EU money is pumped into the infrastructural projects that are in preparation. Properties in and around th major cities have gone up by as much as 56% in the last 12 months. The inevitable housing boom that has sustained Irelands burgeoning economy… Read more »
Very Good article. Most countries (Germany, Spain, Italy, France, etc) population in Europe is in decline except in Ireland. Ireland has the biggest increase in population. The main reasons that I think Europe’s population is in decline are as follows: 1. Most European countries do not believe in family values or in the family unit. The idea of the family unit is gone. For instance in Germany people there prefer to live alone (both male and female). In Ireland we still believe in the family unit but I am starting to see this erode and very soon we will also… Read more »
The crazy notion of economic growth via mass immigration, mean that per person economic conditions have fallen – measured by houseprices/living standards. As David points out – a huge transfer is (still) taking place from the popes children (young) to the (old) jagger generation through property. Young women now have to partcipate in the workforce. The idea of being a housewife is totally impractical. They have to be career minded to earn the higher incomes, going to university, then into the corporate world. This addition to the labour force actually raises per capita, economic living standards, in the short term,… Read more »
Glen, I think you need to do some fact checking. First of all, the total EU-25 population, and the population of Italy, France and Spain, is increasing, not decreasing. In the cases of Italy and Spain the increase is mainly due to inward migration, but not so in France. Check Eurostat. Marriage rates in Germany are similar to those in Ireland (both around 5 marriages/’000 population/year) although perhaps there are confounding demographic factors, and of course the divorce rate is much higher in Germany. I find your theories on homosexual parents interesting, if you have any evidence to back them… Read more »
I hope and pray that Ireland never loses its traditional family structure and marriage as a bond between a man and a woman to materialism and deviance.
Davis is right – we need to look to the East. We need to build alliances and offer a plan B. But Gerry Brandon on Poland and Paul on demographics provide a useful corrective. Europe is not yet doomed and we would be wrong to write it off. The world’s biggest exporting nation is still in Europe – namely, Germany. Clearly China is powering ahead, but its economy too will hit constraints – in fact, some would argue that is starting to happen now. Rural peasants and workers alike are starting to demand more fairness and better services of their… Read more »
Hey McWilliams, 3 things 1. The EU is a compromise. So while we have to suffer their issues, they have to suffer ours (farming etc). I don’t think that you’ve proved that the balance is negative. Furthermore you miss the real purpose of the EU – as a scapegoat for necessary reforms. In the same way that our equality and environmental regulations needed the EU, then their economics need the EU and us as the prime example. 2. Change – the EU may be slow and cumbersome but it has reformed itself massively over the years and will continue to… Read more »
Hi Paul, I was not counting immigration because these people would not represent the indiginous population. If you look at birth rate to death rate you will find that most European countries population are in decline. (It’s like our government putting unemployed people in fas courses to get them off the live register in order to distort the figures.) https://www.odci.gov/cia/publications/factbook/geos/gm.html#People https://www.odci.gov/cia/publications/factbook/geos/it.html#People Looking at the data from the Eurostat website I see that marraiges are in decline arcoss Europe except in Ireland. The web site does not indicate whether they are including same sex marraige in these figures. From what I… Read more »
Pat McCarten I note your observations about women in the workforce and the low overall reproduction rate. Do you suggest that women marry at 21, stay at home, have 6 children before they hit 30 and all are looked after economically by hubby who goes out to work? That is not possible nowadays but Irish women of previous generations had that sort of lifestyle and most of their children had to emigrate to find work. In 1950s Ireland we had overcrowding and tenement living standards in cities, and families of 8 children being raised in 2 roomed country cottages with… Read more »
The ageing populations of Eastern Europe will cause significant problems in the future. But don’t think that Ireland will be immune – our TFR (total fertility rate) is already below replacement rates – we’ll just experience the problems of an ageing population later on.
Regardless of whether the EU shrinks and dies economically or whether it finds a solution and flourishes, it makes economic sense to build as many strategic alliances as possible.
WRT Irelands birth rate as a whole I don’t believe it matters as much as the birth rate of our prospective markets where ever they may be. Nevertheless keeping women in the workforce and providing a stable population base is advantageous. Major changes are needed to address this dilemma so that we can have the best of both worlds.
The average house price is 14 times earnings!!
What choice does a young woman have? She can battle it out with unlimited immigration in low skilled low paid jobs, with little chance of reasonable credit, and no chance other than renting, or she opts for a career, scraps her kids thinking she can have them later, which she can’t.
The laughable comments about 1950s tenament living, if immigration was controlled, and asking whats wrong with being replaced by immigrants kids show just how determined the jagger generation is to literally suck the very lifeforce itself from the native Irish young!
Pat McCartan
I presume that if you are married you are happy to support your fecund young wife and burgeoning family on a single income.
The native Irish young of the future will be the children of the indigenous Irish and our current immigrants. New blood, new ideas and the abolition of inbred thinking can only be a good thing and is our only hope in a global market.
Just out on rte news: http://www.rte.ie/news/2006/1128/gay.html Same sex couples are now aloud to adopt children and get married in Ireland. To SpinstaSista, Basically you are hoping that the Irish people gets displaced and taken over by other nationalities. Basic human primitive urges are: 1. People will form groups around other individuals that have the same values, beliefs and ideals as themselves. 2. Immigrants coming into the country will not regard themselves as Irish and there children being born in Ireland will also not regard themselves as Irish. This can be seen all across Europe. This is one of the biggest… Read more »
David do you not see some glaring holes/contradictions in the questions you ask and the assumptions you claim to hold? First of all, you use the word ‘we’ a lot. Is there really a ‘we’ of any credibility in relation to Ireland, anymore? Let’s stop pretending, I say. It’s all about the ‘ I ‘, now, isn’t it? Even your possible solution about opening the door to more from abroad, throws light on that lie. ‘…We played beggar-my-neighbour with our tax system and won.’ I’m a little uneasy in the way that you seem to boast about the way Ireland… Read more »
Ireland is so small and so vulnerable in a global context that it must be nimble and seize every opportunity that presents itself. A declining European population maybe a problem in the longer term, but the ability of the new states to compete with us will be a fare greater one in the short term. Our population size is our main problem, as it’s too small to allow us to achieve critical mass in any sphere and as things stand our “home market” is Europe. As the Eastern European states develop their skills, more and more competition will emerge and… Read more »
Pat,
You seem to know a lot about womens fertility, do you know as much about mens?
And as for the word “can’t”, there is no such word, its called “choice”!
Isobel
To SpinstaSister,
I forgot to add the following to one of your questions.
“Do you suggest that women marry at 21, stay at home, have 6 children before they hit 30 and all are looked after economically by hubby who goes out to work?” – The Feminist organisation are all in favour of polygamy in the US and in Canada. They are calling polygamy a plural marriage and the feminist are regarding it as a feminist choice. I saw the story in the financial times over the weekend and here is the link:
https://registration.ft.com/registration/barrier?referer=http://search.ft.com/searchResults?queryText=british+columbia&javascriptEnabled=true&location=http%3A//www.ft.com/cms/s/a9de0b06-7bef-11db-b1c6-0000779e2340.html
To SpinstaSista, “Do you suggest that women marry at 21, stay at home, have 6 children before they hit 30 and all are looked after economically by hubby who goes out to work?” – The feminist organisation have a solution to your question and the solution is that they are in favour of polygamy in the US, Canada and soon to be introduced in Europe. The feminist see polygamy as a feminist choice and it also leaves women with the ability to pursue a career. The story was in the financial times and here is the link: http://www.ft.com/cms/s/a9de0b06-7bef-11db-b1c6-0000779e2340.html I can’t… Read more »
I’m not an FT subscriber but I read the abstract and I get Glen Quinn’s point. Polygamy could address many problems in this country including the lack of affordable housing. I am not surprised at UK women in their 20s marrying. This has always been the case, unlike Ireland, where we don’t have a strong culture of dating and marriage. Up until recently the local matchmaker had to bang people’s heads together to get them to marry, and now the matchmaker been replaced by anotherfriend.com! Irish people have always had a better chance of marrying and having families if they… Read more »
I think we are making our country less competitive by over regulation & zero dialogue with small & may be medium sized businesses too. We should concentrate on freeing the small guy from regulatory burdens,so that he can raise the bar,create more wealth and get on with his expansion plans. The cost of questioning your employee’s lackaidasical performance,or demanding higher productivity from an employee, who has mentally retired from the job(but physically on the payroll),is enormous here,and consequently no honest dialogue takes place. Similarly public sector employees need to be given a healthy dose of competition,to bring out the best… Read more »
Hi SpinstaSista, Actually it was very common in Ireland for people to get married in either there teens or early twentys (before the Celtic tiger started) Three of my friends got married when they were 21 in Dublin in 1994. My parents got married when they were 19 and 18 and so did there brothers,sisters and friends. It is only since Ireland became rich that people started worriing about there careers rather than worring about starting a family. The UK went through what we are going through 20 years ago. This is how Ireland is 20-30 years behind the rest… Read more »
Glen Quinn,
I’m not a feminist in the strict sense of the word, but in my opinion women do not fare any worse under fundamental Islam than they do under fundamental Christianity. Both religions encourage women to be modest in their dress and meek in their behaviour and treat women as baby making machines. Islam seems to place more value on educating women than Crhistianity.
Have we gone off topic here?
Hi SpinstaSista, You have things very very wrong. First of all Islam do not educate women, you have that completly wrong. Second of all Christianity is not fundamental, it has not been for the past 200 years after the age of reason and enlightenment. However Islam is very fundamental and there goal is to spread Islam all over the World. All women that are married are not alloweed to work. This applies also to Islamic women in Europe (UK,France, Germany etc). Womens rights are trying to change this here in the UK but Islamic men do not recognise them. There… Read more »
Glen
I don’t think that this site is a place for religious discussion but apparently Judaism, Christianity and Islam all have the same root – Abraham. I work in a university where 50% of our Muslim students are female. Perhaps Muslims are like everyone else – wealthy women have a better chance of education.
Wiping out the indigenous population by having lots of babies isn’t unique to Muslims. To put it in biblical terms, we need to take the log out of our own eye before we take the speck out of our brother’s eye.
Hi SpinstaSista, Then why are there wide spread disruption with Islam all over Europe, North Africa, Middle East and Indonasia. In North Africa there is ethnic cleaning happening in Chad and Somalia, where the Union of Islamic courts are taking over the countrys to run. I currently live in the UK and the disruption that I’m seeing are: 1. They want to change UK foreign policy 2. They want to establish there own court system (Sharia courts) 3. Jews, Christians, Aethiasts and other religions are not allowed in there mosques. 4. Why must a Jew or Christian have to convert… Read more »
Glen, Quite a few of our female Muslim students go home to their own countries and practice as doctors and dentists treating Muslim women. Your point “Why must a Jew or Christian have to convert to Islam before marrying an Islamic male or female” brings to mind the “Ne temere” decree which was imposed in Ireland in the early 20th century and led to much unhappiness and division in this country. Basically a non-Catholic who wished to marry a Catholic had to convert to Catholicism before the marriage could take place. However, I do think you’re right, Ireland will become… Read more »
One good argument for EU disengagement is that we could, free ourselves of transnational lobbying interests at the EU level, and with progressive people in government take a leadership position in terms of sustainability. I’m wondering why this government is not taking climate change as a significant impediment to our future socio-economic growth. We could actually be leaders in this area, but again we’re hoping for the free ride.
Check out the following article for an interesting slant on labour force qualities… has some resonance in Ireland (I hope) http://hbswk.hbs.edu/item/5570.html
very interesting article.i saw you put forward this idea in the t.v. series the popes children.
it is certainly forward looking.in the years to come as farm subsidies,subside and as ireland becomes more and more of a net contributer to the E.U.,ideas like this will have to be explored.
many countries have prospered outside of major economic blocs.
just look at switzerland and norway.
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