Irish Economics Made Simple

Sunday, July 26th, 2009 by Kevin Teljeur

I’m frequently (too frequently, some might say!) posting on Boards.ie, particularly these days in the Politics section, where you’ll find no end of interesting ideas on a) Ireland and the EU and b) Ireland’s economy. Although there are some notably intelligent and articulate posters with some very interesting ideas and facts to present, there are also a sizeable group of people there who might be best described as baboons with basic Internet and computer usage skills. These are people who consider Ireland to be a proud and powerful nation, where the current recession (it’s actually starting to be referred to as The Recession, the capitalisation reflecting the realisation that it’s going to be sticking around for the best part of the next ten years or so) is just a small speed-bump on our accession to the throne of Rulers Of The Free World. With that goes ‘We don’t need the stinking EU’, ‘We should leave the Euro Zone’, ‘Immigrants Out’, ‘Germany owes us because without us the Euro is nothing’, ‘We have manufacturing up there with the best in the world, sure our butter is the best there is’ and of course that old chestnut ‘We’ll retake the North by force because it’s rightfully ours and we have the best army in the world, and it’ll employ people’. Hmm… Yes. Indeed.

Still, these things are a useful barometer by which you can judge the general mindset of people here. While the extremist views aren’t indicative, they give you an idea of where the general trend might be, and it seems that there’s still an incredible feeling of entitlement, of the idea that the rest of the world owes us, and the more we lose the more ‘they’ should all get a move on and give us what’s ours, which is generally lots more money, less working hours and whatever the hell else we want.

It’s not going to happen. Here’s why. In the general healthy scheme of things, in running your country’s economy when you are not totally self-sufficient, you would want a situation along the lines of the following:

I make half the food I eat. I buy the other half from you. Starvation! Except, I also make cars. I sell the cars to you at more than it costs me to make them. This pays for the other half of the food I need. In fact, if the value of the cars I sell to you is more than the food then in fact I’m working on a profit. At least, I can aim to break even.

Ireland isn’t terribly self-sufficient, and back in the 1980s was also very much in debt and had little in the way of native manufacturing. But we had an educated workforce which spoke English, and was willing to work hard:

I make half the food I eat. I buy the other half from you. Starvation! Except, I can work for you for very little, and I’ll let you build your factory in my garden, and turn a blind eye to what you do within that factory. This pays for the other half of the food I need. In fact, if you make enough stuff in my garden and give me enough work then in fact I’m working on a profit. At least, I can aim to break even.

But somehow that changed, probably because the profit part gave an illusion of self-sufficiency, which made costs rise and credit easier, and also the ‘turn a blind eye to what you do within that factory’ approach was applied to regulation within critical areas such as construction and finance. We have had a case here in recent years of:

I make half the food I eat. I buy the other half from you. Starvation! Except, I also make houses. I sell the houses to me at more than it cost me to make them, and I borrow to make up the difference, from you. This pays for the other half of the food I need. In fact, if the profit of the houses I sell to me is more than the food, then in fact it just makes my situation acutely worse, or if you decide to stop lending, or if I decide I can no longer afford my own houses. And I still need to get half of my food from you.

But this is what actually happened, and happened quickly:

You tell me to stop running my economy this way. I take my cock out and wave it at you. You stop lending to me. I stop buying my own houses, and my economy comes to a grinding halt. I decide on a strategy to pay you back, which is to be cleverer than you and sell you the difference in cleverness. Despite all the evidence to suggest the my situation is a symptom of an acute deficit of cleverness, and that you clearly believe at this point that I need to shut up and stand in a corner with a pointy hat until you’ve figured out what to do with me.

Oh, and the kids move to your place, which sort of gives you my cleverness for free. Starvation.

It would have been good for the ‘Germany should bail us out because we’re so special‘ thread on Boards.ie, a hilarious exploration of the Irish recessionary mind-set. I’ve over-simplified it a lot, I’ll admit, and I’ll be open to constructive amendments on this train of thought. It’s probably over-inspired by the ‘two cows‘ humour system (this has better actual examples. The previous one is a little… over-cooked).

One Response to “Irish Economics Made Simple”

  1. Ian Cox Says:

    Kev,

    Spot on. First two paragraphs nailed it for me. However IMHO I think you stopped just short of getting to the source. For me, nationalism is the wellspring of the vast majority of these problems. In fact if you go back over the points you make in the first paragraph I feel all of them find their roots in nationalism. Alot of the more mature anti-republican commentators (Eoghan Harris, Myers, Murphy, etc) arent clued in to things like Eirighi (who pretty much run the show on Politics.ie)or the new tide of young proto-provos in the college system. But it’s no surprise that this new breed is heavily involved in Shell-to-Sea, the Anti-Lisbon brigade, and alot of anti-American nonsense.
    I am a big fan of going to the source and hitting it hard.