A Fine Day For The Irish

Tom Friedman tells us how Ireland went from one of the poorest countries in Europe to one of the richest in less than a generation:

Ireland's advice is very simple: Make high school and college education free; make your corporate taxes low, simple and transparent; actively seek out global companies; open your economy to competition; speak English; keep your fiscal house in order; and build a consensus around the whole package with labor and management - then hang in there, because there will be bumps in the road - and you, too, can become one of the richest countries in Europe.

Earlier, Mr. Friedman also cited national health care.  What he does not cite is border control - some of this might be hard for the US to do in the context of our current immigration situation.

Nor does he emphasize the benefits of being subsidized by larger neighbors, as Ireland was by the EU.

That said, other countries within the EU have been subsidized with less impressive results.

The Economist has a feature story on Ireland from October 2004, as well as some background.

MORE:  Where were the editors?  This, from Friedman's piece, is baffling:

The results have been phenomenal. Today, 9 out of 10 of the world's top pharmaceutical companies have operations here, as do 16 of the top 20 medical device companies and 7 out of the top 10 software designers. Last year, Ireland got more foreign direct investment from America than from China. And overall government tax receipts are way up.

Huh?  In context, it seems that Mr. Friedman is trying to shock us with the news that last year the US invested more in Ireland than it did in China.  But what he wrote says that China invested less in Ireland than the US did - is that really a surprise?

Comments

[Crank]

Traditionally, Ireland needed border control the way Mexico does today.

[Chris]

re: "9 out of 10 of the world's top pharmaceutical companies have operations here, as do 16 of the top 20 medical device companies and 7 out of the top 10 software designers."

If I'm not mistaken, this is largely the result of tax-sheltering by foreign firms who can send products into the EU without tariffs as long as something as simple as "testing" occurs in an EU country. Many chip makers, for instance re-test chips in Ireland that have already been tested in the US for the simple reason that it allows them to jump over EU tariffs.

[Geek, Esq.]

Yeah, he didn't mention the buckets and buckets of cash that the EU pumped into the economy.

What happened to Friedman? I remember him making sense about a decade or so ago.

[dsquared]

You missed the real card trick that Friedman plays in this article; it's right in the first paragraph, like all good feats of misdirection.

It's the surprisingly common trick of "talking about GDP as if it were national income". Ireland has a high GDP because of all the foreign-owned companies domiciled there to take advantage of the tax treatment. However, this has an offsetting negative item for "factor payments overseas" in the national accounts, which means that national income for Ireland is substantially less than national product. For countries like France or Germany, national income is substantially higher than national product, and indeed, higher than Ireland's.

The tax-haven strategy has certainly worked for Ireland; growth has been great and the foreign companies expand the Irish tax base. But saying that Ireland is the "second richest country in Europe" is just wrong.

[Ursus]

I lived in Ireland for a year. They've done a lot of things right, but they are also coming from a hard place (I used to say that Ireland was the nicest of the Eastern European countries), and they are willing to do the stuff that soft Europe won't.

As has already been pointed out, they did a good job of sucking money out of the EU to fund road/port development, and they are still a net consumer of EU taxes. Another thing Friedman probably excludes from his list (I haven't read his neurotic trash in years) but is hinted at is a very high level of multilinguists. It used to be that if you were a US company selling goods or services into Europe, you had to put a call center or translation house in Ireland because they had the highest density and a very friendly tax policy (and naturally, because they had well-educated, multilingual citizens).

They also have lesser degrees of socialized medicine and education than some other European countries.

Oh, don't forget that they are among the most religious of European countries too.

Overall, Ireland is the marquee for what Eastern Europe will produce if they are capitalized at the same rates and adopt similar policies. It's also an example of what soft Europe could do if they'd quit trying to mimic Sweden's near collapse.

[Sean]

Mr. Friedman should also add to his list of things to make a successful country:
- Vitrually no military spending
- Have a population smaller than any US state
- Export the uneducated to the US, UK and Australia

One sordid little secret that Friedman doesn't want to mention is that in Ireland, you pretty much MUST know your career path by age 13 if you want "free" education.

As part of their nationalized and free education, secondary-level education is very specific. University admissions require high grades in fields related to your chosen profession, so in order to get those grades, you must start studying in those specific fields when you're young.

If you didn't know you wanted to be a computer programmer at age 13, and did not start taking math and science classes, you'd never score high enough on your "A-level" math and science examinations for admission into a free computer science program. The result? No future in Ireland. You can't become a biogist in Ireland after preparing to be a computer science major and failing.

There are no free liberal arts programs in Ireland. Education is pretty much job training. No "finding yourself" in Ireland.

You can't decide at 16, after 2-3 years of one curriculum, that you want to do something else with your life. "Free" education won't pay for that.

The Irish take aptitude exams as a 13 year old, and based upon how well you do in certain areas, fields of study are offered for secondary education.

Since there is no "profit" to be made in Irish education, free government education is the only game in town. You don't like their methods, or don't do well within their confines, you have choice left but to leave the country.

As a result, large numbers of very intelligent Irish youngsters never attend college/university, because they didn't know at 13 years of age what I didn't figure out until I was 26. Having little to no professional future in Ireland, they head off to foreign shores where opportunities for education are more flexible.

So, Ireland ships out temporarily unproductive workers, and ships in engineers from China, India and Pakistan who will work at lower costs than native Irish.

Sound like a country that values it's citizens?

Friendman advocates that free education was a significant key to their success. Their "free" education, however, severely limits the freedom of choice young people in Ireland have.

As bad as our education system is here in the US, we at least still have the freedom to learn what we wish as we get older. That's a luxury that "free" education does not offer.

[Sean]

...Since there is no "profit" to be made in Irish education, free government education is the only game in town. You don't like their methods, or don't do well within their confines, you have choice left but to leave the country.

As a result, large numbers of very intelligent Irish youngsters never attend college/university, because they didn't know at 13 years of age what I didn't figure out until I was 26. Having little to no professional future in Ireland, they head off to foreign shores where opportunities for education are more flexible.

So, Ireland ships out temporarily unproductive workers, and ships in engineers from China, India and Pakistan who will work at lower costs than native Irish.

Sound like a country that values it's citizens?

Friendman advocates that free education was a significant key to their success. Their "free" education, however, severely limits the freedom of choice young people in Ireland have.

As bad as our education system is here in the US, we at least still have the freedom to learn what we wish as we get older. That's a luxury that "free" education does not offer.

[Robert Musil]

Tom,

I like Friedman. I really do. But he's never there when you really need him. This column is a case in point.

Tom, Ireland absorbed billions in EU quasi-welfare money each year following its 1973 admission to the EU - and remained dirt poor for all that. Just like most everyone else who blots up welfare money. It's a sucker's play - and the Irish eventually figured out they didn't have to be suckers and bums, they could be contenders.

Ireland started to get rich when the Irish caught onto American tax cutting and regulation reducing and labor rationalizing (and putting aside the counter productive British-bashing) - thereby royally ticking off the big "donors" of the EU, who have done nothing but threaten "equalization" and imposition of their "social agenda" on Ireland ever since.

The new approach proved that it's no longer true that an Irish patriot will do anything for his country BUT THINK. Sometimes it's the SMARTS of the Irish and the GUTS of the Irish, and the WORK of the Irish that pay off big - so the LUCK of the Irish can just be part of the fun, the way it should always be. And the Irish know that now. Which is why the Irish will not be intimidated if the Germans and the rest try to cut back their subsidies - although people in all walks of life would rather ride a bit, even the Irish!

Friedman doesn't undertand the Irish. He just knows the coffee and food are better in Dublin now than it used to be. He senses some big difference, like a new scent in the morning - but he can't quite bring himself to admit that it's some of the thinking of Ronald Reagan that's in that fresh Irish air.

[Zoon Politicon]

Ursus is talking complete nonsense.There are private and public schools and if the government is kind enough to pay for everything bar 300euros a year for college education, then they really shouldnt have to continue paying for graduates. And we have a course in college called Arts. You may have it in America.It allows you to study what you want for three years allowing tremendous flexibilty

[TM]

For nit-pickers - Friedman corrects the China - US investment error in his next column.

[kim]

Well that one won't ever ripen you into a flea-bitten nit hatchery.
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