1970s THROWBACK
Jul 24th, 2008 by Conor McCabe
when Irish value is not threatened by imports, grants should not be necessary to create business opportunities. The only justification for granting non-traded businesses is in cases of particularly acute regional disparities within Ireland… In addition to being unnecessary, grants to non-traded businesses create a “businessmen’s dole” mentality. All companies may come to expect a grant for any investment. The lack of a grant may even become a stigma indicating that a company or project is not worthy.” A Review of Industrial Policy: a report prepared by the Telesis consultancy group (Dublin, 1982), p.36
Hindsight, they say, is a wonderful thing.
What a pity we don’t use it.
In 1981 the National Economic and Social Council (N.E.S.C.) commissioned a report from the Telesis group, the objective of which was to analyse Irish government industrial policy. Joe Lee deals with the political context surrounding the report in his Ireland, 1912-1985: politics and society, (pp.532-3). However, there’s one part of it that when I read it on Monday I thought, tax incentives for the building industry. This is from page 13 of the report:
Growth generated by the development of non-traded business opportunities can only provide a limited source of income due to the size limitations of domestic demand. Long-term industrial growth can only be provided by the development of businesses exporting outside Ireland.”
It seems so blindingly obvious: government incentives to stimulate domestic industry provide a limited return for the investment, simply because the domestic market is itself, well, limited. This is not to say that there shouldn’t be government incentives, but that they should be issued sparingly.
large companies in non-traded businesses such as cement, packaging, distribution and importing have experienced considerable growth over the last five to ten years. Many have invested abroad in businesses in the same fields as those in which they participate in Ireland and in unrelated non-traded businesses in Ireland itself. while these strategies are understandable from the point of view of the individual companies, from the point of view of the country this is not the best use of the managerial, financial and organisational capability of these companies. (Telesis report, p.15)
The report was written 26 years ago, and was related to 1970s industrial policy. Yet, in many way, domestic stimulus remains a strong part of Irish government industrial policy, particularly with regard to the domestic construction industry.
There is a great emphasis in Irish historiography on personality-based causation, and political “events”. And yet, the forty-year relationship between the Irish body-politic and the domestic construction industry slips through personality-based, or indeed event-based, causation in history. The relationship is the thing. It’s the thing that survived the 1980s, and it will remain untouched for the foreseeable future, especially as we are back to the de facto criminalisation of the unemployed again - in the eyes of Mary Hanifan, our problems stem not from the self-interest of the powerful in Irish society, but, amazingly, from its weak and marginalised sections.
Still. Irish political life and domestic construction. Still in love after all these years. Kinda touching in a way, no?
Thank you, Conor, for pulling out the most far-sighted, radical and amazingly relevant report on the Irish economy - the Telesis Report. It’s publication was greeted with horror by the ‘establishment’. All the more curious since the report was drawn up by an American management consultancy firm - hardly a revolutionary body. It’s critique was simple, as you pointed out - we were wasting money, resources and time grant-aiding low value-added multi-national firms and non-traded business such as construction. We needed to build up indigenous skills and businesses. It’s prescription was to identify 75 to 100 Irish-owned companies (it was called ‘picking winners’ or ‘naitonal champions) and, with the full resources of the state, grow these companies internationally. It was a kick in the teeth - not only to accepted industrial policy, but to all those who believed that the free inter-play of ‘market forces’ would do us right. Telesis said we need public sector intervention - a lot of it and fast. Conservative commentators went apoplectic and the Government disowned the report. Except - the IDA took it on board, went out and ‘identified winners’ - both companies and sectors, brought them here to Ireland. What happened next was the Celtic Tiger economy.
We should republish and update the Telesis Report and this time apply it to indigenous enterprise. We need it now more than ever.