Irish Economy

What has the Celtic Tiger ever done for us?

04 May 2010

"In the final quarter of 2009, for the first time ever, revenue from services exports exceeded revenue from manufacturing exports."

Perhaps my favourite film of all time is Monty Python’s “Life of Brian”. One of the many scenes I happily watch time and again is where the People’s Front of Judea discuss the contribution of the Romans to their homeland. Bit by bit, they strike off the contributions, until their leader notes:

All right, but apart from the sanitation, medicine, education, wine, public order, irrigation, roads, the fresh water system and public health, what have the Romans ever done for us?

In the Irish version of the joke, the Romans used to be replaced by the British. After all, apart from one of the most comprehensive railway networks in the world, widespread land ownership, an efficient bureaucracy, a concept of civil liberties and the system of government here, it’s hard to think of that many things the Free State inherited from the Brits.

I say “used to” be replaced the British, because now we have a new bĂŞte noire, the Celtic Tiger. Articles such as Fintan O’Toole’s, which I commented on a couple of weeks ago, and Gene Kerrigan’s in last Sunday’s Independent, take as their maintained hypothesis throughout – without even feeling the need to show any proof – that the Celtic Tiger period only ever achieved one thing: impoverishing the nation. In Kerrigan’s words, “the Government didn’t allow bankers and speculators to gamble with our futures, it relentlessly encouraged them.”

When a crisis hits, perhaps it is the visceral inside us, but it becomes too easy to assume that all was in vain and is now lost. In Ireland’s case, that translates to the last 15 years having achieved nothing other than high debt and unemployment. A couple of weeks ago, in the response to O’Toole, I highlighted a few reasons to be optimistic about Ireland’s prospects for the future. Today, though, I would like to do something perhaps more important than speculate – take stock.

Here are ten important, game-changing things that are part of the legacy of our Celtic Tiger years:

  1. 400,000 Jobs. While unemployment is high now, and the numbers signing on are greater now in absolute numbers than in the early 1990s, we have seen unprecedented jobs growth over the past two decades, growth that has not all faded away since 2007. There are almost one third more people working now than compared with the start of the CSO’s detailed quarterly survey of households in 1997. Perhaps 30% doesn’t sound like that much, but it is by no means to be sniffed at. It’s about three times the same figures for the US, the UK and the by-all-accounts very competitive Germany. It’s 400,000 more people living here, working, spending money and supporting other jobs.
  2. Women at work. This is important enough to have as its own point. There are 50% more women at work now than in 1997. Woman no longer live in a society that deprives them of the right to work and reach their potential, if they want to.
  3. Higher Incomes. While incomes have taken a hit in the last 18 months, they are still well above where they were pre-Celtic Tiger – and yes, that is taking account of changes in prices. Inflation over the past 10 years has been about 40% (depending on when exactly your end date is). Incomes are up by about 70% in the same period. Again, in international comparison, we have improved our relative position immensely since the early 1990s.
  4. The Services Economy. Thanks to modern communication technologies, global trade in services is driving growth in trade, particularly for wealthier economies. And the Celtic Tiger has transformed our economy into one of the world’s leading exporters of services. In the final quarter of 2009, for the first time ever, revenue from services exports exceeded revenue from manufacturing exports. To my knowledge, Ireland is the only economy in the world – apart from perhaps re-exporters such as Hong Kong – to achieve this.
  5. The Internet Economy. In relation to ICT infrastructure, while it’s easy to criticise and talk about what we could have, Ireland’s businesses have decided to make do with their lot in the meantime. EU figures out last month show that firms in Ireland generate almost one third of their turnover from e-commerce, far more than in any other EU country. This ability to innovate and use new tools will stand Irish business in good stead in the future.
  6. Investment in Education. Between 1995 and 2005, Ireland massively increased its investment in education – according to the OECD, by 84%, a figure surpassed only by Greece. Ireland’s unusual post-modern baby boom (our birth rate is the highest in the developed world) means that the pupil-teacher ratio at primary level has stayed largely the same, despite the increase in teachers. Ireland’s secondary school pupils have benefited, though, from the sizeable investment in education. Class sizes are lower secondary are now the fifth smallest in the OECD (having been 10th smallest in 2000). [General caveat: small class size is more a luxury than a necessity - there is no strong link between class size and pupil performance.]
  7. Skilled Workforce. As the IDA used to say, we are the young Europeans! Only one in six of Ireland’s 55-64 year-olds has tertiary education, a figure that rises to one in three of Ireland’s 35-44 year-olds, putting them 10th in the OECD league table. However, Ireland’s 25-34 year-olds are the fifth best qualified in the OECD, with 44% having some form of tertiary education. There are clearly pockets that need to be addressed – Ireland has many young men in particular without tertiary education unemployed at the moment – but that does not mean all is lost.
  8. Old Age. Ireland is now one of the best places in the world to grow old. Irish women who reach 65 can typically expect to live another 20 years now, three years more than in 1995, according to the OECD. Irish men will typically live 17 years from 65, an improvement of over three years and the largest increase in the EU over that period.
  9. Health care resources. If we were to believe the conventional wisdom, Ireland’s health service comprises very few doctors, even fewer nurses and a wealth of administrators and middlemen. However, OECD figures show that Ireland, even with a younger (and therefore healthier) population than our EU neighbours, has over 50% more nurses per capita than the next most nurse-endowed EU member, the UK! (In fact, on this front, we may have something to learn from Austria and France, which seem to get by just fine with half as many nurses…)
  10. Roads. Well, I could hardly finish a post on “What has the Celtic Tiger ever done for us?” without mentioning roads! In the recession of the 1980s, transport infrastructure was largely sacrificed in favour keeping up high levels of investment in education. It looks like the same will happen again this time around, but not without Ireland putting in place a major motorway network for the first time. In 1996, there were just 21km of motorway for every million citizens. By the end of this year, that number will have increased by a factor of 10, making Ireland’s motorway network one of the largest in Europe (relative to population, of course), as the graph below shows. For those who can now drive from Dublin to Cork in about 150 minutes, that makes a huge difference.
Km of motorway, per million inhabitants, 1996 and 2010e

Km of motorway, per million inhabitants, 1996 and 2010e

The above list is not meant to give the impression that all is well with the Irish economy. It’s not – in particular, our Government finances are in particular need of drastic fixing over the coming 10 years. However, various commentators trying to convince the general public that the Celtic Tiger only achieved bad things, in particular the transfer of the nation’s wealth to a small elite, belittle the huge changes that have occurred in the Irish economy, and society, over the past 15-20 years.

So next time you’re down the pub and someone says, “The Celtic Tiger? Sure what did that ever do for us?”, get them to rephrase the question to something along the lines of:

All right, but apart from 400,000 jobs, 50% more women at work, significantly higher incomes, the transformation of our economy to a services export world-leader, the Internet-based economy, significant investment in education and health, more teachers and nurses, a skilled workforce, a long and healthy old age and roads… what has the Celtic Tiger ever done for us?!

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14 Comments

  1. Treasa said on May 4, 2010 | Permalink

    Hi Ronan,

    while this is certainly a point that needs to be made, on the subject of tertiary education I would question the value of said tertiary qualifications in many cases.

    From an outside observation, I’d take the view that the Irish population has a slightly skewed view of tertiary education. We have been training quite a few solicitors and architects, for example, and not so many scientists and technologists. This is because much interest in our tertiary education system is driven by perceptions as to where the money lies. So the value of the amount of tertiary education lies in the devil of the detail which you don’t and maybe can’t easily provide.

    On the subject of services exports versus manufacturing exports, I am looking for equivalent figures for the UK which I can’t exactly find. However, I can see that they are running a significant trade surplus in services but significant deficit in manufacturing. Is it possible to get comparative figures for the UK – I cannot – at this point – locate them on the UK’s statistics website

  2. Jagdip Singh said on May 4, 2010 | Permalink

    Ronan, is your favourite song Ian Dury and the Blockheads “Reasons to be cheerful”? Fair play to you for adding some balance to the overwhelming gloom. One other benefit of the Celtic Tiger, I would suggest, is that our traditional poverty of ambition has been replaced by the knowledge that we can achieve great things economically (okay let’s not put all the eggs in one basket next time, though).

  3. Ronan Lyons said on May 4, 2010 | Permalink

    @Jagdip
    Thanks – there are probably other, more difficult to measure, social benefits such as greater openness to migration that we will also come to recognise in time.

    @Treasa
    Good point on tertiary education. Ireland only gets a “C” from the Conference Board in terms of science graduates per capita. Even at a more fundamental level, are the science graduates we produce good enough? Again, that should not take away from the overall progress that has been made in getting people into tertiary education.

    On the services export point, the UK is a major services exporter… but it’s a question of proportions. The USA and the UK are the world’s biggest service exporters. However, despite its small size, Ireland is among the top 10 service exporters in the world! Will see if I can find full stats later today.

    Thanks for the comments,

    Ronan.

  4. Stephen.kinsella@gma said on May 4, 2010 | Permalink

    Splitter!

    Have a read of Michael O’Sulivan’s new book ‘What did we do right?’, it’s really an excellent piece along the same lines as your post: http://www.blackhallpublishing.com/index.php/what-did-we-do-right.html

  5. Stephen.kinsella@gma said on May 4, 2010 | Permalink

    Also, could it be that you are highlighting one side of the same coin Constantin is looking in his debt series? Much of this growth was debt-fueled, after all: http://trueeconomics.blogspot.com/2010/05/economics-03052010-world-debt-wish-6.html

  6. rubensni said on May 4, 2010 | Permalink

    I was always of the opinion that the Celtic Tiger period ended in 2002. By comparison the 2003-07 cycle was a splurge.

  7. Ronan Lyons said on May 4, 2010 | Permalink

    @Stephen Ah, I didn’t know about that one! Good call. Re the debt point, most of what’s listed above was not really debt fuelled, the good hard work was done in the 1990s. Granted things might have been a bit slower if we’d been more sensible throughout the 2000s but the trajectory was there.

    @rubensni That’s a very good point. While it’s not as black and white as cutting off in 2002, the overall thrust of economic growth had definitely switched from net exports to government/building. Already in 2009, there was huge swing back to net exports (which added 3 points to growth… so can you imagine what would have happened our GDP/GNP last year if we actually HAD been hit by the global recession?!)

  8. kevin denny said on May 5, 2010 | Permalink

    The problem, as ever, is knowing the counterfactual. Some of these things might have happened anyway & left us with less pain so attributing these things to the CT is something of a leap.
    By “investment in education” do you mean spending on education? Not the same at all but governments like to categorize consumption as investment as it sounds better and it removes the requirement for any obvious, immediate benefit. In the case of education, do we know that this extra spending has translated into improved outcomes? I’m sure some of it has (I’m thinking of my salary, perhaps Stephen’s too) but lowering class sizes across the board, for example, is a great way to waste money.

  9. Diarmuid said on May 6, 2010 | Permalink

    Diversity in people and food! and choice..choice of partner ;)…and where to go eat or too have a cappucino or a good old cup of tea..

  10. Joe Carroll said on May 11, 2010 | Permalink

    Ronan, your point about the impact of class size is wrong or at least the evidence suggests this, see:

    http://www.voxeu.org/index.php?q=node/4471

    An interesting article;

    “The effect of class size on students’ performance is – as expected – negative; students do worse in big classes. Namely, a given student receives lower marks in courses with larger classes, everything else equal.”

  11. joe said on May 14, 2010 | Permalink

    hospital waiting lists, trolleys, ward closures, misdiagnosis, potholes, overcrowded prisons, whitecollar crime avoidance, useless tribunals, prison sentances for menial offences, graduates doing minimum wage jobs, greater divide between rish and poor, ghost estates, importation of waste, shell to sea, bertie ahern, lisbon (where are those jobs?)….. do you think i should stop now ?

  12. Michqel said on June 4, 2010 | Permalink

    @Joe, in other European countries like France for example graduates must do unpaid work. The gap between rich and poor is not very pronounced. In Germany an engineer like myself earns about the same as I do in Ireland, but an unemployed person gets put to work for a Euro an hour. On that point there is no minimum wage in other wealthy European countries such as Germany, ours is the second highest. Our dole is multiples of the British job seekers allowance, and in Ireland nobody expects you to show up with a list of jobs you applied for.

    We are a tough crowd of people to please, we have one of the lowest tax burdens in Europe but we want to pay less and also have better public services.

  13. Paul Doolan said on November 22, 2010 | Permalink

    Well Ronan,now that the country is bankrupt, are you still so cheerful?

  14. Ronan Lyons said on November 23, 2010 | Permalink

    Paul,
    Have you looked around the rest of this blog? I think you could hardly describe me as an apologist for the good times! The point of this article, however, was that while it’s probably incredibly unfashionable to admit that there is some aspect of a positive legacy of Ireland’s Celtic Tiger, it is undeniably true.
    So yes, I’m still as cheerful as I was. Although I think you might have miscalculated how cheerful I was to begin with.
    Thanks for the comment,

    Ronan.

7 Trackbacks

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  3. [...] To address this point of view, I can only recommend an article written by Irish economist Ronan Lyons entitled What has the Celtic Tiger ever done for us? [...]

  4. [...] better place to live than any of us thought possible in 1996, 1986 or indeed any previous decade. The Celtic Tiger was not a mirage. And we have a very real economy that, with a good bit of hard work and with a fundamental [...]

  5. [...] better place to live than any of us thought possible in 1996, 1986 or indeed any previous decade. The Celtic Tiger was not a mirage. And we have a very real economy that, with a good bit of hard work and with a fundamental [...]

  6. [...] place to live than any of us thought pos­si­ble in 1996, 1986 or indeed any pre­vi­ous decade. The Celtic Tiger was not a mirage. And we have a very real econ­omy that, with a good bit of hard work and with a fun­da­men­tal [...]

  7. Thinking the Unthinkable on February 23, 2014

    [...] better place to live than any of us thought possible in 1996, 1986 or indeed any previous decade. The Celtic Tiger was not a mirage. And we have a very real economy that, with a good bit of hard work and with a fundamental [...]

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