The Future: A Small Open Euro-Irish or Anglo-Irish Economy?

The biggest challenge for the next generation of policy makers is to stop thinking so ‘Irish’. To really challenge the tradition of complacency, group think, anti-intellectual, anti-left, cute hoorism and back scratching that dominates Irish business and politics. Ireland has to start learning from the experience of other small open European economies if it is to adapt to future challenges facing a small open economy on the periphery of Europe. There is simply no point comparing Ireland to the UK or the USA anymore.

This is not to say we can automatically cut and paste the corporatist success of Netherlands, Finland, Austria or Denmark given our historically diverse political-institutional contexts. But, there is still a lot to learn, particularly in the remaining policy areas available to national governments in a shared monetary union (and global economy); fiscal, labour market and social policy.

I am currently based in the Netherlands and when Irish public policy is examined comparatively one is immediately confronted the conundrum: how can Ireland maintain a low tax model yet simultaneously expect the same level of public service as our European partners? Furthermore, how long can Ireland sustain an industrial and developmental socio-economic policy premised on low cost and FDI?

It seems that there is trend and public discourse emerging in Ireland that we were not ‘liberal market’ enough over the past 15 years. That is, we attempted a hybrid between Anglo-liberal and Euro-social public policies and we should revert to a purer version of former. I think this would be a policy and institutional mistake.

The success of small open European economies is premised on a wider tax base, higher marginal and effective tax rates, higher levels of employer contribution to social insurance, higher levels of public spending (particularly education), strong indigenous enterprise, embedded systems of collective bargaining in wage setting, flexible yet secure labour markets (flexicurity), higher levels of part time employment to distribute work in a down turn, well funded child care support. Finally social welfare is considered an active process of support to ensure the collective well being and capabilities of its citizens. Ireland has a long road to travel to become more Euro-Irish but it is essential if we are to ’save the future’.

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