economics

The Irish government's long-term plan for the country is not as visionary as it looks.

Irish governments are often in a damned-if-you-do damned-if-you-don’t position with regard to how to distribute investment. Concentrate too much on Dublin and they’re accused of neglecting the rest of the country. Distribute investment throughout the country and they’re accused of adopting the old “one for everyone in the audience” approach to buying off potential voters.

Both accusations can be unfair. Since Dublin is home to 40 percent of the country’s population, neglecting them is hardly an option, but neither is neglecting the rest of the country.

To address the issue the government has announced, with much fanfare, its Project Ireland 2040 plan. This is a national development plan aimed at putting a coherent vision around future growth. Liberal use of the word “rebalance” emphasizes the point that Dublin has reached a critical mass that is sucking in vast numbers of people from the rest of the country, and that the opportunities that attract people to the city need to be made available elsewhere.

Fianna Fail’s criticisms of the plan have been dismissed by the government as “opposition for opposition’s sake.” Michael Martin, the Fianna Fail leader, has complained about the government using taxpayer-funded “expensive marketing” to promote a plan that looks more like an election manifesto. This is somewhat harsh. In a democracy such plans require public buy-in if they are going to be a success, and it is entirely appropriate for the government to communicate its ideas clearly.

Nor is it fair for Mr Martin to criticize the government for not putting the plan to a vote in the Dail. There has already been ample public consultation over the last three years, and forty public meetings later is a bit late to be complaining about a lack of input.

So what is in the plan? It addresses ten areas.

First is the establishment of a National Regeneration and Development Agency for compact growth. The aim is to incentivize more development that is clustered together as opposed to one-off housing, or “bungalow blight,” that makes it so difficult and expensive to provide essential services. One-off housing made some sense in the days when agriculture was labor-intensive and needed large numbers of people living on the land, but today few people have a compelling reason to live in an isolated house far from any others. Elsewhere in the world, to live in the country is to live in a village where services are easier to provide.

Second is an enhanced road network to better connect towns and cities. Third is a Rural Regeneration and Development Fund of €1 billion to balance out growth between Dublin and regions, plus a National Broadband Plan to provide internet access to villages, rural areas and islands. Given the expense of building a broadband network, where delivering to larger towns makes more economic sense, this is one area where the government may have over-promised.

Fourth is a “Sustainable mobility” plan aimed at improving transport options within towns and cities. Flagship projects include the long-awaited Metro Link in Dublin, parts of DART expansion, and an overhaul the current bus system nationwide. Segregated cycling and walking facilities and networks are also included, all of which will require extensive stakeholder input. Poorly-designed bike lanes are a great way to waste money since they often go unused, but can take thousands of cars off the road when implemented properly.

Fifth is giving equal priority to encouraging local entrepreneurship as opposed to attracting Foreign Direct Investment (FDI). If this is delivered, it will be a sensible change in policy and has the potential to make the biggest economic impact. Ireland has for too long depended on companies to do the innovating in places like Silicon Valley and then sought to attract some of the resulting ancillary jobs. While this has helped to improve employment numbers, locally-grown innovation has the potential for the next Facebook or the next Google to be an Irish endeavor. A high profile technology firm born and headquartered in Ireland would add more value to the Irish economy than the crumbs that the country currently gets from the US-based technology table.

Point six of the plan focuses on international transport links, namely airports and sea ports, and part seven deals with culture. The idea is that towns and cities need more than good roads and buildings. They need a soul, and culture is a crucial ingredient in adding to quality of life. A national cultural and sporting infrastructure plan is envisaged for towns and cities for the next decade.

Part eight is a €500m Climate Action Fund to address greenhouse gas emissions, primarily focused on the transport sector, and to shore up flood defences. Lofty ambitions here include getting half a million electric vehicles on the road by 2030, banning the purchase of diesel-only buses by July 2019, and phasing out non-zero-emission cars by 2045.

Part nine, dealing with water management, reads like a description of everything Irish Water would like to do, and interestingly the phrase “water charges” appears nowhere in the report.

Finally, part ten deals with healthcare, education, and childcare. Health gets €10.4 billion, education €8.8 billion, and childcare €0.4 billion.

When hacking through the buzzword-compliant fluff of the report, there is some good quality policy insight to be found. However a disappointing aspect is the relegation of railways in favor of roads. While some investment in roads is always welcome, it is disappointing that rail travel seems to have been treated as an afterthought. A true commitment to compact growth would have seen villages clustered around train stations such that people could potentially live in a village, work in a nearby city, and not need to use a car on a regular basis. Yet the plan spells out in great detail which roads are going to be expanded but gives railways lip service in the form of feasibility studies for high speed intercity rail and continued maintenance of existing tracks and signalling. There is not even any mention of electrification of heavy rail lines; instead we are to get more diesel-electric trains, which conflicts with environmental goals. For intra-city transport and quality-of-life improvements, bike and pedestrian infrastructure would be front and center.

Critics have said that Project Ireland 2040 is a repackaging of existing spending plans, and there is some justification to that. While it shows some areas of promise, it is not as visionary as Leo Varadkar would have us believe.

Ireland needs to look at the bigger picture of land use if commutes are to be made easier.

In September it was announced by the Taoiseach that a 14km stretch of the M7 motorway at Naas in County Kildare will be expanded from two lanes to three in each direction at a cost of €120 million. Such announcements are typically described at “easing congestion” and reactions generally include phrases like “at last” and “badly needed.” However experience shows that this sort of project seldom leads to any improvement in the long run and usually makes traffic conditions worse.

The M50 orbital motorway surrounding Dublin was supposed to alleviate congestion, yet it has been described as “Dublin’s biggest car park” since drivers now creep along in first or second gear. Daily traffic at the M50 toll booth has risen from 109,434 vehicles in 2009 to 142,496 according to Transport Infrastructure Ireland (TII) and the National Transport Authority (NTA).

This is not surprising to anyone familiar with the concept of what economists call “induced demand.” When a good is provided free or very cheap at the point of use, it becomes almost impossible to keep up with demand for it. In the case of roads, induced traffic is the phenomenon of newly widened highways into a city filling to capacity in a short period of time and ending up just as congested as ever with cars plodding along at walking pace. Even if conditions are temporarily improved, people living in the city have an incentive to take advantage of lower property prices in outlying areas. An expensive home in the city is exchanged for a cheaper home in the suburbs with a slightly longer commute. However as more people do the same thing and move to the same area, the roads into the city fill up and what was once a quick commute becomes a grueling grind.

In the United States, unbelievably, authorities persevere with making roads ever wider in an attempt to keep up with demand, resulting in freeways over ten lanes wide, vast monstrosities that still seem to remain clogged with nearly stationary vehicles at commute times.

So if the solution to traffic problems is not to make roads wider, what is? Some would argue that well funded public transport can get more people into town more efficiently, and there is some merit to this. Even if a bus were only 25 percent occupied it would still be more utilized than the average car that has four empty seats in tow and takes up far more road space per occupant. Trains offer even more efficiency, speed, and comfort without swallowing up vast quantities of land and splitting communities with a constant stream of noisy traffic like a motorway does.

However as any fans of Douglas Adams will know, getting the right answer is pointless if you do not ask the right question. Instead of asking how we can more efficiently move everyone from A to B, we should be asking why so many people are trying to get from A to B in the first place and asking if we can shorten the physical distance between the two.

Ireland’s problem is too much economic activity concentrated in Dublin where there is a shortage of housing. Dublin is not the only city in the world to suffer from a jobs/housing imbalance, and a look at the bigger picture makes it clear that the solution has to be a bigger discussion about land use and regional development, not just looking at transport in isolation.

To give credit where due, the government has sought to attack some aspects of the problem. There is a proposal to raise height limits in the construction of new residential buildings in cities. This is essential if Ireland is to become competitive as a place to live and work with a decent quality of life, so it would behoove the government to follow through on this promise. The only alternative to building upwards is to build outwards, and every floor added to a planned building at the urban core is one less patch of green grass paved over on the edge of town.

Every separation of land use is guaranteed to cause more people to drive. Retail “parks” and office “parks” that are only accessible by car should be banned in favor of traditional city streets. Allowing mixed uses such as corner stores in housing areas and commercial and residential development on the same street can eliminate car journeys now that people have the chance to live within walking distance of more destinations. Higher density housing can be quite comfortable if more of citizens’ daily needs are within walking distance. Nor should urban loft apartments be seen as a threat to anyone’s way of life or be seen as a repeat of the failed inner city housing projects of the 1960s. Raising a family in the suburbs is fine, but students and young single professionals would much prefer to live in a compact walkable neighborhood where there is plenty of nightlife and entertainment options close to hand. For younger people who have not yet settled down to start families, what is available outside the home is more important than what families consider important.

Higher density living in town also makes it easier to provide economical public transport options since buses, trains and trams have more people living and working within walking distance of their boarding points. For those who do want to live in suburbs, sensible decisions can also be made on good principles of urban planning so that driving a car does not become the default option. Cul de sacs can be fine as long as they allow pedestrians and cyclists to take shortcuts through roads that would be a dead end to car drivers, which in many cases can make the bike a quicker means of getting to certain destinations than the automobile.

Every ounce of power given to the NIMBY lobby is a threat to future economic growth, evidenced by the farcical situation of a major Apple datacenter development in Athenry being held up by one person who is able to mount a legal challenge in the courts despite overwhelming support for the project among locals. The same person is also objecting to a $1 billion Amazon data center campus in Dublin. That projects like these can be delayed for years by two men and a dog is an indictment of a legal system that gives too much power to curmudgeons. Housing developments often face similar blockages despite the state being in the midst of a housing shortage and homelessness crisis.

Above all, Ireland needs to embrace urban living and come to understand that the benefits of living in a city cannot be fully realized by trying to accommodate cars at the expense of people. Cities are for living in, not driving through. The sooner the government learns this, the better.

Ireland’s current woes do not have to be a sign of terminal decline.

The Eurovision Song Contest may have been cheesy, but in the 1990s it was still taken reasonably seriously.  Winning the event for three years in a row from 1992 through 1994 and hosting it three times was a point of pride for the Irish people.  We got to showcase what a modern and forward-looking nation we had become.  Riverdance exploded onto the scene at the 1994 event.  A dramatic and uplifting performance took a traditionally conservative and somewhat stiff form of dance and put an innovative, dynamic, modern face on it, something we could proudly present internationally as a high-brow cultural expression of who we are as a people emerging from an impoverished past.  We marveled at our ability to put on such a professional performance on an international stage and not mess it up.

The national soccer team was playing well.  We had beaten England and held the Soviet Union to a draw in Euro 88, and were challenging the big teams for supremacy by reaching the World Cup quarter finals Italy in 1990 and the round of sixteen in the USA in 1994.  Crowds filled the streets in celebration and gave a rapturous welcome to the team on their return no matter how far they progressed in the tournaments.  We celebrated not just the sporting success, but also the impeccable behavior of our traveling fans in contrast to “certain other” supporters at the time.

We consistently had some of the strongest economic growth in the OECD.  Business was booming.  European structural funds were helping to transform our infrastructure, replacing creaking old roads with shiny new motorways and upgrading the main Belfast to Dublin railway line to a high speed service on a par with anything on the continent.  The Economist newspaper and other media outlets around the world sang the praises of the Irish economic miracle.

Peace had been achieved in Northern Ireland with the signing of the historic Good Friday Agreement, ratified by the people, and the participants in the conflict bought into it to make it work.

Croke Park was rebuilt into one of the largest and most advanced stadiums in Europe, while our Gaelic games carried on providing spectacular entertainment in front of vast crowds, undaunted by the success of soccer and rugby.

Mass emigration, long a scourge since famine times and an inherent part of our culture, had been eliminated. People were no longer leaving the country in droves, and the people of the newly-enlarged European Union were tripping over each other to get in.

We were held up as an example of how small nations could govern their affairs, succeed, and prosper.  Within a generation we had put decades of stagnation and mediocrity behind us.  We had done it.

Where are we now?

A steady drip of scandals has shown that the land of comely maidens and cozy homesteads was nothing of the sort.  The land of saints and scholars was in fact a land of theocratic dictatorship that facilitated and covered up heinous crimes against women and children under the guise of religious piety, a practice that lasted until well into the supposedly more enlightened 1990s.  It was a land of incompetents and gangsters who thrived in a culture where respect for the rule of law was all but non-existent, where the bribe was more powerful than due process.

As our wealth accumulated the whole enterprise took a turn for the worst when we joined the European single currency.  Eager to escape the sphere of influence of our nearest neighbors, we aligned ourselves with the continent even though the vast majority of our trade was (and is) with Britain, surrendering control of interest rates to the European Central Bank. When our economy began to overheat, instead of having a central bank that could raise interest rates to cool it down, easy credit kept on pouring in to the booming economy.

It became a land of naive belief in easy money.  By building, buying, and selling houses to each other instead of actually creating anything of value, we could build upon our hard-earned riches even more, and we could splurge as tastelessly as we liked.  Ostentatious displays of wealth abounded.  We arrogantly sent a puppet turkey to Eurovision to thumb our noses at the whole proceedings.  And when the inevitable happened and the day of reckoning arrived, our hard-earned money was replaced with a massive bill, run up by reckless bankers and developers, their wheels of business oiled by the sleaze seeping out of the brown envelopes containing “gifts” that were “resting in the accounts” of politicians.  Our sovereignty was in ruins, the Germans became our owners and masters.

Peace in the north seems to lurch from one crisis to the next, often exacerbated by the annual marching season, with unionists issuing threats to pull out of government and collapse the institutions established by the agreement that the people voted for.

Airports once again handle the heavy traffic of young people leaving the country, not to watch the World Cup finals for which we were no longer qualifying, but in search of a livelihood that once again is unavailable at home.  And to cap it all we have shown that we are incapable of hosting something as simple as a major music concert.

Is this the end, then?  Was it all an illusion?  Was our prosperity really just an overdraft? Are we doomed to an eternal cycle of emigration that will drain our life’s blood away?  Are we too incompetent to govern ourselves after all, and is the Irish nationalist mission a fool’s errand?

The answer to all of these questions is an emphatic ‘no.’

The Celtic Tiger economy came in two parts.  Celtic Tiger 1.0 was a legitimate achievement.  It was built on exports, exploiting our access to the massive EU market, and taking advantage of an educated English-speaking population that is well able to do business globally.  EU structural funds helped, but this was a small proportion of the economy, never more than 5 percent of GDP.  Celtic Tiger 2.0 was a product of cheap credit and speculation.  There was a greater incentive to invest in property than to make a viable business that was going to work.  When a collective group faith in the never-ending appreciation of real estate set in, the property bubble inflated until it burst.  Yes, controversy will reign for generations about whether or not the Irish people should be on the hook for for the debts of the banks, but it will be cleared eventually, just as Japan eventually clawed their way back from their “lost decade” in the wake of their 1980s asset bubble.

The strengths that built Celtic Tiger 1.0 have not gone away.  Ireland still has access to the EU market, and still has an educated Anglophone workforce.  Emigration may be undermining this, but that is not necessarily a total waste.  We no longer live in a world where distance means lack of contact.  Many of the the bright and educated emigrants are settling in locations that are awash with business and networking opportunities.  In mingling with the movers and shakers of places like Silicon Valley, Irish people are building business relationships that will last and can have long term benefits for Ireland as investors are made aware of the country’s potential, and entrepreneurs in Ireland hear about new business opportunities on the other side of the world thanks to their far flung friends and family who keep them posted.

As for our ability to govern ourselves, there are weaknesses but there are also strengths.  For all of the scandals that lurked behind closed doors in the dark days after independence, Ireland has never been shy about opening up old wounds and cleaning them up, as opposed to leaving them to fester.  The seemingly constant process of running tribunals is painful to watch, but it is a sign of a functioning democracy that has mechanisms in place to find out what the mistakes were and to correct them.

For all the bluster from extremists in the north, nobody would seriously consider a return to the dark days of the Troubles.  The institutions, despite the problems, have endured, just as the Irish people have endured over centuries of turbulence and hardship.

Cynicism and defeatism may be fashionable Irish traits, but they are not the only way of looking at the world or our place in it. Our own worst enemy is a pessimism that we can choose to govern us or choose to overcome. It should be an easy choice to make.

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